SBP working towards minimising Rs8.79trn currency in circulation

KARACHI: The State Bank of Pakistan (SBP) is working on fast pace to minimise the current Rs 8.79 trillion currency in circulation besides expending financial services to Small and Medium Enterprises (SMEs), through digitisation.

Deputy Governor SBP Saleem Ullah said this while addressing an event titled: ‘Cashless Supply Chain 2023’ hosted by Haball – a B2B Financial Technology (fin tech) company at a local hotel on Tuesday.

Saleem Ullah appreciated Haball for making sincere efforts towards supply chain digitization in the country. “The very theme of cashless supply chain gives me lot of confidence, as it is enabling me and my team to achieve two to three strategic goals we are pursuing.”

SBP’s one goal is to replace as much as possible the cash economy with the digital economy. The central bank is trying to reduce the currency in circulation in our economy. About Rs 8.87 trillion of currency in circulation which is highest in the world. This is creating difficulty for us in implementing monetary policy and documentation.

He said that one of the largest usages of cash is in supply chain. If we are able to digitize 20 to 30 percent in next 2 to 3 years, it will make a huge impact on currency in circulation.

If we want to minimise the use of cash, let’s make it mandatory for the manufacturers and wholesalers that they will only be accepting the considerations from their retailers and distributors only the digital payments. If the payments are made digitally, the retailer will not be interested in handling the cash. “I really like this top down approach.” the SBP Deputy Governor said.

We are taking these large manufactures and larges distributors to be onboard on digital platforms like Haball so that they can require their distributors, retailers to be part of that cashless supply chain system.

SBP’s second objective is expending financial services to SMEs. We are serving less than 5 percent of SMEs, while the rest of 95 percent are excluded from our financial system.

The Central Bank has full commitment with respect to its digitisation efforts.

Saleem Ullah said despite all odds, today more than 75 percent of FBR revenue is being collected through digital platforms, and in near future, it will be close to 100 percent. We did nothing, we just created interface with institutions. FBR, banks, etc., had the data available with them for automation. But they were not talking to each other. They were processing the data in isolation. What we did is we linked them altogether.

CEO of Haball Omer Bin Ahsan on this occasion said the first three years of our journey, with invaluable support from our partners, 1link and Meezan, and the unwavering assistance from State Bank of Pakistan back then Payment Systems Department in terms of regulatory support and National Financial Inclusion Director in terms enablement grant, we built a framework that could move not just money but also truth.

As this movement gained momentum, we recognized the potential to extend our impact further by connecting it with financing. Our partner Meezan took the lead in creating Wisaaq, Pakistan’s first Islamic Digital Supply Chain Financing platform.

Today, we are proud to serve as a multi-bank supply chain financing platform appointed by the State Bank of Pakistan, aiding in the transformation of supply chains into cashless, transparent, and efficient ecosystem.

Our journey does not end here. We remain committed to supporting our corporate partners in making their supply chains cashless, transparent, and efficient.

We plan to expand our services into Vendor Financing, Retailer Payments, and Retailer Financing.

Through digital payments and financing, we aim to empower the SME sector, which constitutes a significant portion of the Labour force but often struggles with access to capital for accelerated growth.

Our overarching ambition is to serve every community by tailoring solutions to meet their unique needs in terms of payments and financing.

We envision a comprehensive suite of features that provide digital supply chain community banking, ensuring that each supply chain remains liquid, efficiently utilizes its assets to drive growth, remains transparent, and is resilient through economic cycles.

The path ahead is illuminated by the age-old principles of honesty and integrity, as guided by Islamic commerce. As we embark on this journey of digital transformation, we carry with us the wisdom of the past and the hope of a brighter, more prosperous future for Pakistan.

The event brought together industry’s brightest minds to explore the Future of Corporate Supply Chain Payments, and Financing. The speakers came up with discussions, exciting insights, and networking opportunities. Panel discussions and fireside chats were also held on this occasion.

Copyright Business Recorder, 2023