SBP and Arab Monetary Fund's Historic Pact to Transform Cross-Border Remittances
This groundbreaking collaboration aims to offer individuals and businesses secure, cost-effective cross-border payment solutions, while also strengthening economic ties between Arab countries and Pakistan. With a significant number of Pakistanis residing in the Arab region and a substantial percentage of remittances originating from there, this MoU promises to enhance financial connectivity between the two regions.
Karobar
In a groundbreaking move for Pakistan's economy and international financial collaborations, the State Bank of Pakistan (SBP) has inked a significant Memorandum of Understanding (MoU) with the Arab Monetary Fund (AMF), a subsidiary organization of the Arab League. This historic agreement is set to revolutionize cross-border remittances between the Arab region and Pakistan.
A joint press release issued by the SBP and AMF revealed that a formal ceremony was held in Abu Dhabi, where the MoU was formally signed. The primary purpose of this collaboration is to create a framework of cooperation between Buna, the cross-border payment system operated by the Arab Regional Payments Clearing and Settlement Organisation (ARPCSO), which is owned by the AMF, and Raast, Pakistan's very own Instant Payment System.
At the ceremony, the attendees included prominent figures such as H.E Dr. Abdulrahman Bin Abdullah Al Hamidy, Director General Chairman of the Board of the Arab Monetary Fund (AMF), and H.E Jameel Ahmad, the esteemed Governor of the State Bank of Pakistan.
Instant, secure, and cost-effective cross-border payment solutions.
The integration of Raast with Buna is expected to streamline cross-border remittances between the Arab region and Pakistan through official channels. This visionary initiative promises not only to provide individuals and businesses with instant, secure, and cost-effective cross-border payment solutions but also to fortify the economic, financial, and investment ties between the Arab countries and Pakistan.
Commenting on the momentous MoU, H.E Dr. Abdulrahman Bin Abdullah Al Hamidy emphasized that this collaboration with Raast underscores Buna's unwavering commitment to bridging various regions and strengthening the economic, financial, and investment bonds between the Arab region and its global counterparts. He also stressed the shared vision of innovating cross-border payment solutions for seamless instant payments, aiming to enhance cross-border remittances by reducing costs and processing times.
Governor SBP, Jameel Ahmad, regarded this MoU as a strategic milestone that opens the door to closer connections between Pakistan and the Arab region. Ahmad asserted that this collaboration aligns with their vision to leverage cross-border integrations to build an innovative Digital Financial Services ecosystem. This integration will undoubtedly increase remittances to Pakistan through formal channels, offering improved speed, safety, and cost savings in cross-border transactions.
Furthermore, Ahmad highlighted that more than 5 million Pakistanis reside in the Arab region, and approximately 55 percent of Pakistan's total remittances originate from Arab countries. He expressed SBP's dedication to swiftly complete the necessary work to operationalize the connectivity between Raast and Buna.
What is Buna?
Buna is the cross-border payment system operated by the Arab Regional Payments Clearing and Settlement Organisation (ARPCSO), which is owned by The Arab Monetary Fund (AMF). It aims to facilitate financial institutions and central banks in the Arab region and beyond to send and receive payments in local currencies and key international currencies.
What is Raast?
SBP's 'Raast' Instant Payment System is an initiative built on the international standard ISO 20022 and is designed to offer a fast and secure payment solution for customers. It commenced with the launch of the first use case, 'bulk payments,' in 2021, facilitating processes like dividend disbursements, government-to-person (G2P) payments, mutual funds payments, or private entities' payroll payments by corporations.
In February 2022, SBP launched the second use case of Raast, person-to-person (P2P) payments. To date, around 34 million Raast IDs have been created by customers, with more than 270 million transactions totaling approximately Rs5.5 trillion (around $19 billion).
Recently, the third use-case of Raast, person-to-merchant (P2M) payments, has been successfully deployed, promising a bright future for Pakistan's digital financial landscape.
