Sirajuddin Aziz<\/p>\n
Regulators have approved licences for five digital banks in Pakistan, one of which is already operational. These banks use virtual processes\u2014including mobile and online banking\u2014to conduct transactions. A typical digital bank operates end-to-end via technology platforms: clients initiate transactions on the front end, the institution handles back-end settlements, and middleware ensures continuous connectivity between all channels.
\nWhile economic development must be broad-based, key sectors like tourism and healthcare remain neglected. Our neighbour capitalised on medical tourism, attracting both expatriates and foreigners for high-quality treatment at a fraction of Western costs. Pakistan, with its pool of qualified doctors, could do the same. Is it a lack of will or foresight?
\nTourism, too, suffers from poor infrastructure, political instability, and underinvestment. There is a pressing need to reposition our Blue Economy strategy, particularly in light of regional competition, such as Saudi Arabia\u2019s Vision 2030 and Dubai\u2019s forthcoming Al-Maktoum Airport, expected to handle 260 million passengers annually.
\nThe hospitality industry lacks data-driven insights. Peripheral economic benefits of increased hotel occupancy\u2014such as retail and service growth\u2014are overlooked. Globally, travellers favour card payments and expect personalised, seamless, and secure services. We have the human capital to meet these expectations; what\u2019s missing is public\u2013private entrepreneurial commitment.
\nGlobally, cash usage has declined by 50%, a trend accelerated by COVID. Yet in Pakistan, cash circulation is alarmingly high at Rs. 9.4 trillion\u2014around 32% of total bank deposits. Our financial institutions are innovating, but adoption is slow. While OTPs are still used for transaction verification, biometrics are gradually replacing them.
\nCybersecurity remains a serious concern, with digital frauds often stemming from public unawareness. Globally, most payments are now contactless\u2014digital is increasingly an attitude, not just a tool.
\nDigitising the economy is essential. Tax collections consistently fall short, with a Tax-to-GDP ratio of just 9\u201311%\u2014among the lowest in the region. A key issue is the non-recording of transactions. Millions of retailers exist, but only a fraction are registered with tax authorities.
\nIncentivising digital transactions through tax credits for retailers could improve compliance. Rebates linked to electronic sales volumes would further boost formalisation. Customs digitisation has shown promise; now, all government payments should be made via financial instruments, not cash. Although cash data is captured, it is underutilised for tax analysis.
\nOn a personal level, a national campaign is needed to promote banking use. Employers should pay household staff via bank accounts and help them access and learn to use ATM cards. Many, despite limited education, are tech-savvy\u2014financial inclusion should not be hindered by illiteracy.
\nExcessive credit card charges warrant greater financial literacy. Users should be encouraged to pay off balances within the 30\u201345-day billing cycle to avoid interest. Reviving the \u201cleads and lags\u201d economic concept\u2014delaying payments, accelerating receivables\u2014can optimise cash flow. Ironically, credit card users who avoid interest-bearing rollovers are viewed as \u201cbad customers\u201d by banks because they don\u2019t generate profits.
\nCash often fuels corruption, hidden outside the legal framework. Reducing its use ensures transparency, as electronic payments leave an audit trail. Unexplained bank transactions can expose illicit activity, making digital adoption a key tool for accountability.
\nNations thrive when citizens trust their governments. If tax revenues are transparently and effectively used, compliance will rise. Achieving an 18\u201320% Tax-to-GDP ratio is realistic if there is genuine will. Real estate, where official prices rarely match actual values, is a case in point. Auditing bank statements, travel, and accommodation expenses against tax filings can uncover evasion. Fixing the economy isn\u2019t a Himalayan task\u2014it just requires intent. Trust and honesty must become the currency of our collective conduct.<\/p>\n
The writer is a Senior Banker & Freelance Columnist.<\/p>\n","protected":false},"excerpt":{"rendered":"
Sirajuddin Aziz Regulators have approved licences for five digital banks in Pakistan, one of which is already operational. These banks use virtual processes\u2014including mobile and online banking\u2014to conduct transactions. A typical digital bank operates end-to-end via technology platforms: clients initiate transactions on the front end, the institution handles back-end settlements, and middleware ensures continuous connectivity […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10],"tags":[13449],"class_list":{"0":"post-479605","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-article","7":"tag-sirajuddin-aziz"},"yoast_head":"\n