Islamabad: The Government of Pakistan in reference of Buna-Raast. What is Buna and what are the methods, what are its benefits?
Before understanding Buna, it will be very important that we know what is Buna, basically Buna is a cross border payment system which is operated by the Arab Region Payment Clearing and Settlement Organization, just like through the Raast, we can easily transfer funds of the bank within the account of any bank. Similarly, people living in different countries within the Arab region can transfer funds to each other’s accounts i.e., cross border, like our Raast within Pakistan is currently working, so it is made in the same way, it helps in transferring funds to the accounts of different citizens of different countries in the Arab region.
So, it is a platform in which you can easily transfer funds or also you can do it within the account holder of another country, it is owned by The Arab Monetary Fund “AMF” and its basic purpose is to provide mutual support to the different countries within the Arab region. Their central banks should be connected to each other, their currencies should be connected to each other so that they can control what is the flow of remittances, what is inflow, what is outflow. Apart from this, they have international currencies it is included in it.
Now, what will be the benefits of Buna by connecting with our Raast.
Before that let us talk about the currencies available on Buna. You can view the image, the currencies that are listed below!
In the short period, Pakistan will be connected there, then one more bank will be added inside the financial holding institution here, which will be State Bank of Pakistan. In this way, whatever Pakistan is, it will be transferred within these currencies, that is, under the Arab Monetary Fund, which is working through your ARPCSO, that is, through Internal Fund Transfer within different countries, Pakistan will also get that facility.
Benefits/Details of Buna-Raast:
Now what is the benefit to Pakistan, let us move ahead and we’ll talk about it.
- First of all, the Pakistani Rupee will be incorporated as a settlement currency in Buna whic decreases its cost.
- For example, if the remittance is sold to a person from another country inside Pakistan, then the customer has to visit the bank to receive it. Now won’t have to go up to the bank, it will be transfered directly to his account.
- Similarly, any Pakistani want to transfer UAE funds from here, that too will be done through Buna easily, a big benefit is that your cuurency is being settle automatically throught the Buna route.
- Second, this will help in bring transperancy (surely), it would be okay, from which account you are transferring how much funds, from where how much funds are coming, you will have a summary available in the statement form, otherwise normally what happens is that the funds are transferred to NIC first, then to the another account.
- When funds are transfered, the amount of your funds becomes such an irregular pattern that you cannot judge what happens later as to how much remittance has come here and how much has gone there.
- If there is, then transparency currency will increase and leakages in remittances will be reduced. Just as we mentioned about that due to system flow, there are different service providers in remittances, each service provider has different banks, so all that leakage i.e., that disturbance.
- What will all that mean for the customer? Will it gradually be reduced? Will it be easy for the government to do taxation? How many remittances are coming from whom? Where are all those things coming from? And lastly power sector, i.e. whatever is your business sector or energy sector, it will also be easy for him that if you have to transfer funds somewhere outside the country or within any Arab region, then it will also be easy for him. If you have imported something, you are exporting, you are receiving funds, then whatever is there for also, that identity will be created.
- Number three place is the country aligned with its requirement to the Financial Action Task Force (FATF). FATF’s requirement is Anti-Money Laundering (AML) which is less likely to be in double digits as the fund is transferred directly to the account, then the requirement of FATF is the regulatory requirement from Pakistan that they should empower their financial institutions empowerment.
- If this will increase FATF’s requirements from Pakistan, we can easily achieve that which is transparency in the transactions.
- Number four the project would digitally link the economy of Pakistan and the Arab world, boosting productivity and increasing efficiency within systems.
- For example, which is the source of most of the remittances of Pakistan, about 70 to 80 percent of them, from Arab nations. Most of our citizens are working inside UAE, most of the citizens are working in Saudi Arabia, so we are around if we get a kind of control over foreign remittances at 70 to 80 percent, then it is a big benefit for Pakistan to connect with the Arab world, this will increase the productivity.
- Well, what is meant by productivity is that the remittances you send here, you had to visit inside, and for the remittances you had to go to the service provider and then they will transferred your funds to you within Pakistan. It takes two or three business days, so all that time duration gets connected within a click, which also increases system efficiency.
- Number five benefit is that, the individuals’ lives better, because it will make it easier, it will make it cheaper, it will make it cheaper to sell the money there by enhancing the economic condition of families with 90% of receive remittance from being a woman, especially the households like someone’s husband works out of the country and is inside Pakistan, then it will be very easy for them too to receive funds through Raast, otherwise they have to go there, (that discussed all of them before)… also that there is ease for the families to receive the forward remittance through the Buna-Raast.
Transaction Method
Now we are discussing the transaction flow given below:
What will be the method? What will be the role of SBP in this? As we had already mentioned what will SBP become, it will be Fund Holding Institution “FHI”, for whom it be a FHI, for its currency, for PKR, like for someone inside the Arab world. If you want to ask anything with reference to PKR, whatever be the theory, with reference to rate, the amount will be collected from SBP, SBP will convert it and give it.
And the second role of SBP will be participant or inter-operational working with the Raast,, now we explaining the transaction pattern in this, i.e., there is Buna participant (a person who is working in UAE on the example of Buna, okay, he transferred funds through Buna-Raast. If done, it will not go directly to the Raast participant, first it will come to the till of State Bank of Pakistan.
What has SBP to do? SBP has to do the conversion. After the conversion, the amount will come to you, that is, to the participant i.e., his family member who is in Pakistan. It is present in his account inside the UAE) and this will happen very quickly, so to make you understand, hope so you will be understand in depth, so what is the role of SBP here? Here they have to send money in foreign currency from Pakistan, here they have to convert it into PKR, this is the work of SBP basically and after converting it into PKR, they have to transfer the fund to the Raast participant i.e., their family members in Pakistan, so this will be the transaction method.
Hope this key knowledge helpful, if you want to add anything that we forgot, you can do so in the comments!
by Buna.co
