Role of SBP

The large number of accounts and the billions of rupees remitted to Pakistan through the RDA digital platform is not only a testament to the success of the scheme which will increase with the passage of time but is also proof that this is a revolutionary step to strengthen and buttress the economy of Pakistan in a transparent and robust way. By utilising the digital platform, SBP has not only closed the distance between overseas Pakistanis and their homeland’s economy but has also addressed the matter of maintaining physical distance amidst the pandemic, enabling non-resident Pakistanis to enter the banking stream of their country of origin. It is notable that for the first time, banks are sharing KYC with capital market players.

SBP is also supporting and working on a number of other important initiatives which will positively impact the capital markets, including sharing of KYC for domestic bank account holders, along the lines of RDA. This will be a huge step forward in improving financial inclusion and converting savings into investments by increasing the investor base in Pakistan. We hope this will also help develop new business models and open up further opportunities in the financial sector.

Another important area is the trading of government debt securities in the stock market. We have been working closely with the SBP and commercial banks to identify issues in the primary and secondary markets. Again, we are grateful to SBP and the banks for their positive response. This will allow a much wider group of investors to participate in the government debt market and provide even greater price transparency. PSX’s new trading system will allow all investors to buy and sell government debt securities from the comfort of their homes or offices.

For our part, PSX is committed to providing a robust and transparent trading platform to help businesses raise capital and for all investors to make a good return.

Taking the lead in enhancing the digital landscape of the country, the SBP, under the guidance of its able leadership, has also initiated the ‘Raast’ system. This is a simple, fast, low-cost and secure electronic payment system for instant processing of high volume retail payments which will facilitate government transactions and payments. This facility not only fulfils the criteria of digitization but also of financial inclusion.

The State Bank of Pakistan has taken the very important initiative of women participation in financial inclusion, the banking sector and the economy. For the said purpose, SBP has launched consultations on Banking on Equality Policy which is an initiative to increase financial inclusion of women in the country. The purpose is to reduce the gender gap in financial inclusion as it is a challenge for the growth of the country’s economy. Given that only 18% of adult women have active bank accounts compared to 51% of men having bank accounts, this effort is a major push forward to encourage financial inclusion which will help augment and bolster the economy.

The State Bank’s efforts to stabilise the rupee is indeed a hugely positive step for Pakistan’s economy. This is the result of liberalising the exchange rate mechanism and letting market forces decide the rupee-dollar parity.

Another step in the right direction taken by the State Bank of Pakistan is the cutting of the benchmark interest rate to 7% which was the need of the hour as it will go a long way in boosting growth in the economy. Specifically, the interest rate cut has helped and will continue to help businesses and industry to procure relatively lower cost of financing for their expansion or other needs.

Furthermore, the State Bank of Pakistan has played an important role in mitigating the effects of the pandemic for corporates, hospitals, housing and construction sectors, as they have been provided loans on concessionary terms to help pay for salaries for their staff and employees. Moreover, a humane and financially viable step taken by the State Bank during the pandemic has been the large number of loans which were deferred or rescheduled to avoid defaults by corporates and households.

It can be confidently said that the State Bank of Pakistan has been instrumental in bringing much needed growth and progress to the economy of Pakistan. While we have a long way to go in reaching the crest of our economic progress, the progress thus far has enabled the average Pakistani, whether he is an employee, a businessman or an industrialist, to benefit from a growing and prospering economy.