As the chatter of relieving the governor of the state bank of Pakistan, Reza Baqir, of his duty echoes in the halls of the relevant quarters, fintech and digital banking startups hope for a seamless transition and the continuation of similar reforms policy speed and direction. The International Monetary Fund economist was appointed as the governor of the state bank of Pakistan in 2019 for a period of three years and replaced Tariq Bajwa. As he joined, there were speculations and doubts about how he would perform in the office as many referred to his time in the Arab Republic of Egypt and how dependent the Arab republic had become on the IMF. However, as his time as the governor draws to a close, he leaves behind an enviable legacy.
Under his governance, the state bank of Pakistan launched on January 11, RAAST – an end-to-end digital payments system. The government introduced the RAAST system of payment because of the prevalent lack of trust and awareness of digital payment methods, high cost of digital transactions, lack of security, and a poor user interface (UI) of the local applications, which made transactions difficult. RAAST addressed all these issues and offered low transactional cost, increased interoperability, enhanced security, and a better UI. Furthermore, in collaboration with various banks of the country, the SBP also authorized the introduction of Roshan Digital Accounts, which for the first time has made it possible for non-resident Pakistanis to remotely open an account in Pakistan.
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The account offers opportunities to the Pakistani diaspora to operate as such they were operating from Pakistan, giving them digital access to all conventional account services i.e., fee payment, fund transfers, etc. Since its launch, the RDA has attracted deposits of $3.9 billion while at the same time registering 388,494 accounts from 175 countries. As a result of such policies, the second quarterly report of FY22 depicted encouraging growth in digital banking. The state bank reported that the “overall e-banking transactions volume grew by 10.7% to 400mn whereas value by 22.8% to over Rs33tn. During CY2021, volume increased by 41% to 1.4bn and value by 45% to Rs106tn.” Mobile banking volume also surged.
1/2 #SBP issues Q2FY22 report on Payment Systems that shows encouraging growth in digital banking. Overall e-banking transactions volume grew by 10.7% to 400mn whereas value by 22.8% to over Rs33tn. During CY2021 volume increased by 41% to 1.4bn and value by 45% to Rs106tn. pic.twitter.com/g9ONr76Lqt
— SBP (@StateBank_Pak) April 15, 2022
Under Reza Baqir’s governance, the state bank also identified the issue of low account penetration in Pakistan – only 82 million out of the total of 132 million adults have unique bank accounts. In an attempt to overcome this problem, the State Bank of Pakistan embarked on this digitization campaign and, as a result, provided a framework that promoted and enabled a relatively high level of account penetration, at the same time fulfilling the State Bank’s financial inclusion objective. The SBP also finalized the Digital Banking Policy at the beginning of 2022, opening up avenues for digital banks to offer not only mobile wallets but also credit, investments, and other products.
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In addition, the state bank also initiated the MeraPakistanMeraGhar scheme to promote affordable housing in the country. Under the scheme, people from all economic strata are getting loans.
1/2 Latest SBP figures show strong growth in low-cost housing loans to individuals #MeraPakistanMeraGhar. Till 11Apr22, banks received applications of Rs409bn, of which Rs180bn has been approved & Rs66bn disbursed. A year ago total applications stood at Rs57bn &approvals at 16bn.
— SBP (@StateBank_Pak) April 14, 2022
The latest figures released by the state bank of Pakistan show that till April 11, banks received applications of Rs. 409 billion under the scheme of which Rs.180 billion have been approved & Rs. 66 billion disbursed. As a result of this scheme, the construction sector also boomed, which saw a significant increase in construction activity.
This is just a glimpse of what Reza Baqir achieved in his three years in the office and should not be misunderstood as a detailed account of all his accomplishments.