SBP says it'll help increase financial inclusion, eliminate corruption
Prime Minister Imran Khan launched on Monday the Raast instant digital payment system, which would increase financial inclusion and help eradicate corruption.
Raast is part of the premier’s vision to include poor segments of the society in the formal economy. It will enable secure, efficient and transparent financial transactions through end-to-end digital payments among individuals, businesses and government entities instantaneously.
PM Khan said it was important to curtail the cash economy, which reduces tax collection or government revenue. Because of this, he said, the government cannot spend much on the underprivileged people.
There are only 2.2 million tax payers in the population of 220 million, according to the prime minister. Only 3,000 people pay 70% of the total tax.
The government can’t do much for the poor such as building hospitals under such circumstances, he said.
Digital payments in Pakistan only account for 0.2% of the Rs100 billion transactions, according to the SBP data. These transactions range from 1.5% to 7% in coutries comparable to Pakistan.
Under the Raast initiative, shareholders will be provided instant credit of dividends from listed companies. In the next phase, the system would digitize payments made to government employees in salaries and pensions.
Raast will also make payments between individuals easier.
“As we get government departments integrated into this system, people, government employees will get their pensions and salaries in seconds,” SBP Governor Reza Baqir said at the ceremony.
“Savers who have to wait in line at National Savings Centres will get their payments within seconds.”
He said these difficulties would be eliminated once the Raast system was fully launched. International experience shows such an instant payment system revolutionizes financial inclusion, according to Baqir.
“It does so by making it easier for people to transact … and send money to each other,” he said. “They will be able to do so using their mobile numbers, they won’t even need to remember their account number.”
As this happens, according to the SBP governor, businesses will come up with ways to see how they could offer financial products to individuals. Each transaction done through Raast would create a digital history which would allow banks as well as fintechs to offer financial products, he explained.
Baqir said that apart from financial inclusion, the digital payment system will help achieve the goal to eliminate corruption.
“It does to by reducing and eventually eliminating the need for cash,” he said. “Cash is the lifeline of corruption.”
Raast would reduce the lifeline of corruption by making people move away from cash, not by compulsion but by offering attractive alternatives, he said.
This was the reason the system was named Raast which is driven from the Urdu word Raah-e-Raast or the “direct way”, according to the SBP governor. “It is the direct way because it is simple, safe, secure and cost-free, and it is the right way to make payments in a country,” he said.
Baqir called the system a “step in our journey of Digital Pakistan”. It came on the heels of several other initiatives taken by the SBP, he said.
The Roshan Digital Accounts programme was one such initiative to bring the financial system in the reach of Pakistanis who didn’t have it, according to the SBP governor.
“Today, over 70,000 accounts have been opened in that,” he said. “Already $280 million have been sent into these accounts.”
Baqir said the country’s remittances were at record-breaking levels too. “There have been about $2 billion every month since the beginning of this fiscal year,” he said.
“Domestically, we have had an explosion in the use of digital and online channels to make payments,” the SBP governor said. “During the first quarter of this fiscal year, the number of transactions through mobile banking channels rose to 36 million.”
This represented a growth of a 140% over the last year, he added.