In the ongoing fluid economic situation – both due to growing external vulnerabilities and domestic political (and constitutional crisis), the good news is that the inflows in the Roshan Digital Account (RDA) have kept on growing. Contrary to the general perception, in March 2022, RDA net inflows stood at $290 million - third highest monthly inflow in 20 months history. The RDA deposits are standing at $3.92 billion as of 31st March 2022.

Most flows are in the Naya Pakistan Certificate – the toll is standing at $2,469 million which is 68 percent of the total flows. Since the start, NPCs flows were around 2/3rd of the RDA and that trend continues to date. Within the NPC, the flows are almost equally divided into conventional ($1421 mn) and Islamic ($1228 mn).

The inflows in the RDA peaked in June-July 2021 when the monthly inflow was over $300 million. This was the time when the marketing on the product was at its peak and the Islamic version of NPC was introduced as well. Then the flows started moving down a bit and in January 2022, SBP took notice of this and urged the commercial banks to do aggressive marketing. That is yielding results, as the flows started picking up again in Feb ($250 mn)and in March it stood at $290 million.

This is despite the fact the economic situation has worsened. The current account deficit was growing and the SBP reserves started falling. And the global commodity prices hike is challenging sustainability. The story does not end here. The cherry on top is political uncertainty that is peaking since the start of March when the vote of no confidence was tabled against PM IK.

The rumor mills started churning that people are redeeming in large numbers due to political and economic uncertainties. Some were saying that those who leveraged the NPC using their bank in home countries are now leveraging due to growing risk. The credit default swap on Pakistan’s international bonds is at multiyear high and some were saying that SBP must increase the rates.

However, the RDA flows keep on growing. This implies that, as the data suggests, RDA is coming primarily in small ticker size and from across the board, and the money is sticky in nature. To date, 388,494 accounts are being openedfrom 175 countries. The pace of new accounts opening and the growth in inflows are in tandem – the average ticker size is hovering around $10,000.

With no government in April and ongoing constitutional crises with growing economic vulnerabilities, the challenge for SBP is growing on how to continue with this upbeat momentum. Let’s see how the flows move in this and coming months.