State Bank of Pakistan (SBP) is taking proactive steps towards the launch of a cross-border payment system, similar to its domestic instant payment system, RAAST. This initiative is primarily aimed at providing overseas Pakistanis with convenient and cost-free services, thereby encouraging them to send remittances through formal banking channels.
In order to achieve this objective, the SBP has initiated discussions with the Arab Monetary Fund (AMF), an affiliate organization of the Arab League. The goal of these discussions is to establish a connection between Pakistan’s RAAST system and the AMF-owned Buna payment systems. This collaboration is expected to facilitate real-time, cross-border payments for overseas Pakistanis, particularly those residing in Gulf Cooperation Council (GCC) countries.
Jameel Ahmed, the governor of the State Bank of Pakistan, confirmed these developments during the launch of a new Pakistani banknote in Karachi, which marked the 75th anniversary of the SBP. He stated that the SBP is likely to sign a Memorandum of Understanding (MoU) with the AMF soon, which will connect Pakistan’s payment system with Buna. This connectivity is anticipated to significantly improve the speed and cost of remittances.
Linking RAAST with Buna is one of the key objectives of the SBP’s ‘Strategic Vision 2028’. This vision aims to propel the Pakistani central bank further ahead in terms of technological advancements and financial inclusivity.
RAAST, Pakistan’s first instant payment system, enables end-to-end digital payments among individuals, businesses, and government entities. As of March 2023, the number of users registered with the RAAST Payment system had surged to almost 30 million.
On the other hand, Buna, operated by the Arab Regional Payments, Clearing and Settlement Organization (ARPCSO) and supported by all Arab central banks, facilitates financial institutions and central banks in the Gulf and beyond to send and receive cross-border payments throughout the day in real-time in all available Arab and International currencies. It serves as a single-entry point to the region’s financial systems for global financial institutions and a multi-currency and multi-instrument system for local ones.
The introduction of this instant and affordable payment system is expected to incentivize remittances through banking channels. As a result, the inflows from various countries, primarily from GCC states, will be reflected in the banking system, thereby strengthening the economy.
