SBP Announces More Incentives to Attract Foreign Currency Remittances

The State Bank of Pakistan (SBP) has revised the current structure in a view to further incentivize Commercial, Microfinance Banks, and Exchange Companies (ECs) in enhancing their home remittance mobilization efforts.   Accordingly, ECs will be provided a base rate of Rs. 2 for each USD of home remittances surrendered to SBP-designated bank(s). ECs will be paid Rs. 3 for each incremental USD surrendered to SBP-designated bank(s), for growth in home remittances up to 5 percent or $25 million (whichever is lower), in comparison to the previous year. Further, Rs. 4 per USD will be paid against incremental remittances above 5 percent or over $25 million, in comparison to the previous year.   In 2022, it has been decided to allow the Exchange Companies (ECs) to maintain separate foreign currency accounts for each Money Transfer Operator (MTO). Further, the ECs can use such accounts to receive home remittances related to commission/ fee or exchange gains subject to the condition that all such funds are surrendered to the interbank market on the same day. However, incentives under this scheme will be provided only on the foreign exchange generated through home remittances. The performance of ECs will be evaluated by SBP on a monthly basis and payments will be reimbursed accordingly. Any required adjustment in payments, on a consolidated basis, would be made in the last quarter of the Fiscal Year, the circular stated. The above revisions shall take effect from October 01, 2024. The operational instructions related to the implementation of the incentive scheme for ECs will be communicated separately. A different scheme was announced for commercial and microfinance banks. To further incentivize the ADs and MFBs to maximize their efforts for increasing remittance inflows, the reimbursement of SAR 20 will be made for all eligible home remittance transactions of $100 and above. An additional reimbursement of SAR 08, per incremental eligible transaction, will be made for up to 10 percent or $100 million growth in home remittances over the previous year (whichever is lower). Further, additional reimbursement of SAR 07, per incremental eligible transaction, will be made for growth exceeding 10 percent or $100 million in home remittances over the previous year.   The performance of ADs/MFBs will be evaluated by SBP on a monthly basis and payments will be reimbursed accordingly. Any required adjustment in payments, on a consolidated basis, would be made in the last quarter of the Fiscal Year. The above revisions shall take effect from October 01, 2024. The operational instructions related to the implementation of the T.T. charges scheme will be communicated separately.