SBP looking to facilitate cross border remittances between Pakistan, Arab region
The Arab Monetary Fund (AMF) and the State Bank of Pakistan
(SBP) are currently in discussions at a technical level to integrate their
payment systems, facilitating cross-border remittances between the Arab region
and Pakistan, as disclosed by the SBP's Deputy Governor.
Last year, the chairman of AMF and the governor of Pakistan's central bank signed an agreement aimed at establishing a cooperative framework between Buna, a cross-border payment system operated by the Arab Regional Payments Clearing and Settlement Organization (ARPCSO) and owned by AMF, and Raast, a Pakistani instant payment system designed for real-time settlement of small-value retail payments, including inter-bank peer-to-peer and person-to-merchant transactions.
Arab
Monetary Fund and State Bank of Pakistan sign MoU to facilitate cross-border
remittances
These technical discussions aim
to integrate the two systems, enabling millions of Pakistanis residing in the
Gulf region to send remittances in real-time at a reduced cost. This
integration will not only benefit individuals but also facilitate businesses by
providing instant, secure, and cost-effective cross-border payments, ultimately
enhancing economic, financial, and investment ties between Arab countries and
Pakistan.
Saleem Ullah, the SBP's Deputy Governor, stated that negotiations at the technical level are ongoing to finalize the modalities and necessary developments required for both Buna and Raast. Once these technical discussions are completed, the details will be shared with the vendor for implementation. Fortunately, the same vendor serves both Buna and Raast, streamlining the process. However, the execution of the project is expected to take at least a year, subject to the vendor's estimates regarding the required developments.
SBP
announces Raast and Buna integration for Gulf remittances in 8 months
Financial experts anticipate
significant benefits from this initiative, particularly for the five million
plus Pakistanis residing in the Gulf region. They expect reduced hassle in
remitting money to Pakistan, increased affordability, and accessibility for
ordinary Pakistanis to utilize legal channels for remittances, thereby
encouraging compliance. Moreover, this initiative is projected to facilitate
business transactions, potentially opening up more export opportunities for
Pakistani goods and services in the Gulf region.
Ultimately, the aim of this initiative is to regulate remittances through the SBP instead of informal channels, potentially allowing the SBP to leverage these remittances for funding from Gulf markets or for commercial or governmental payments.
Source: Arab News