Prime Minister Imran Khan said on Tuesday that the rollout of Raast Person-to-Person, an initiative of the State Bank of Pakistan (SBP), would enhance the formal economy of the country by allowing people to utilise banking channels.
In his address at the launching ceremony of Raast Person-to-Person funds transfer and settlement services, Khan said the initiative is to facilitate the common man to avail banking services.
“The launch of this system would push people towards becoming part of the formal economy as banking system will be used.
“Furthermore, saving rates would improve,” said Khan, adding that countries only prosper when their saving rates are improved.
“However, Pakistan has one of the lowest saving rates in the world. The utilisation of our banking system is low. This results in a low tax-to-GDP ratio,” Khan added.
PM launches Pakistan's first instant Digital Payment System 'Raast'
In the past fiscal year, e-banking transactions worth $500 billion took place in Pakistan. This is more than the size of our GDP, which is $370 billion: SBP Governor Dr Reza Baqir
PM said that a population of 220 million is a major strength for any country as it offers a huge market.
“If this population is brought into the formal economy using modern tools, they can become a major strength. However, a major part of our population is out of the formal economy,” he said.
The prime minister informed that the government is using technological tools to enhance its tax system. “Only 2 million pay taxes out of the total population of 220 million,” he lamented.
“At the end of our five-year term, when our tenure will be assessed, I would look into only one factor and that is if we were able to reduce poverty level in Pakistan, and if we're able to reduce it we would see whether its effects were translated towards the bottom,” he said.
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The PM said that he would consider it an achievement “if we were able to pull people out of poverty”.
He said that as per World Bank's latest report, despite the Covid-19 pandemic, the poverty levels have raised only marginally as compared to other countries.
“Lastly, I would urge the SBP to establish a cell, which would address concerns of Overseas Pakistanis, as they are our biggest assets,” he said.
Meanwhile, SBP Governor Dr Reza Baqir in his address stated, “Raast P2P initiative will bring a revolution in financial inclusion in Pakistan, and will ease making payments between persons.”
Talking about the features of Raast, the governor said that the payment system is fast, as it provides the end-user with a near real-time payment experience. “Secondly, Raast is free of cost, a bank cannot charge any sort of fee unlike other payment systems,” he said.
“Thirdly, we have made Raast simple to operate, all you need to register yourself through a banking app using one’s mobile number as a Raast ID, which will be linked to the bank account.
“Raast is available on all channels. Lastly, the customer is kept at the forefront, if the customer is not satisfied with the service of a bank, they can change their account and by delinking the Raast ID could connect with another bank, to avail the best banking features.
“We are confident that with these features the latest SBP initiative will be popular among the public,” he said.
He said that Raast is part of the national payment strategy, which was launched back in November 2019. He added that this is a very advanced system and is available in only few countries including Malaysia, Turkey, Australia and UK.
Talking about the launch of digital banks, the SBP chief informed that the central bank would issue five licences. “These digital banks would cater to the common man,” he said.
Baqir said that due to the measures taken by the central bank to promote digital banking, in the past fiscal year e-banking transactions (non-cash based transactions) worth $500 billion took place in Pakistan.
"This is more than our GDP, which is $370 billion. Each year our e-banking transactions increased by 30% YoY.
“We are confident that these figures would improve further with the launch of Raast P2P initiative,” said Baqir.
Meanwhile, Finance Minister Shaukat Tarin in his address at the launching ceremony said that through Raast P2P, the country will see a boom in e-commerce activities.
“I believe that e-commerce would witness a boom with this initiative, and it will increase further in the next step when the SBP moves from person-to-person to person-to-merchant.
“The IT sector including freelancers is looking forward to this system, and they believe that this will bring a revolution, and growth in IT especially exports,” said Tarin.
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He added that this system would also improve our savings rate, as people will use a bank account to avail this facility, and reduce the cash in circulation. “Saving rate has to go up to 30-40% in order to ensure sustainable growth,” he said.
Tarin informed that in the coming days the prime minister would announce further measures to help the lower, middle-class and salaried class, facing the brunt of rising inflation.
Raast (P2P)
Under Raast P2P fund transfers and settlement services, bank customers would be able to send and receive funds in their accounts using their bank’s mobile application, internet banking or over the counter services. To facilitate their customers, banks will also allow them to create a Raast ID by linking their preferred International Bank Account Number (IBAN) with their registered mobile phone number.
The customers can then share Raast ID with others to receive funds in their account. Bank customers can use Raast service for sending or receiving funds using their IBANs even if they do not have a Raast ID.