Inward home remittances: ECs can maintain separate forex accounts for each MTO: SBP

KARACHI: The State Bank of Pakistan (SBP) has allowed the Exchange Companies (ECs) to maintain separate foreign currency accounts for each Money Transfer Operator (MTO) under the home remittances promotion measures.

In February, in order to further encourage the Exchange Companies to mobilize home remittances, the government of Pakistan has decided that the Exchange Companies will be provided an incentive of PKR 1 for each USD of home remittances surrendered in the interbank market provided that the Exchange Companies surrender 100% of the foreign exchange received as inward home remittances.

In addition, previously, the Exchange Companies were allowed to open and maintain a separate foreign currency account for receiving inward home remittances through Money Transfer Operators (MTOs) and surrendering the foreign exchange in the interbank market.

In this regard, now it has been decided to allow the Exchange Companies 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.

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The SBP has also issued related procedures and minimum documentary requirements along with Standard Operating Procedures (SOPs), for the submission of claims under this incentive scheme. As per terms and conditions, ECs will submit their claim for the preceding month by the 15th of next month to the Director, Foreign Exchange Operations Department (FEOD), SBP-BSC. However, ECs can submit their claims for the months of February 2022, March 2022, and April 2022 separately till May 31, 2022.

After verification of the submitted claim, the approved claim amount will be paid to EC in its designated PKR account. The payment of incentive claims would be made on a ‘First In, First Out (FIFO)’ basis. In case of the availability of limited funds, the remaining claims would be processed after the release of funds by the government.

The amount paid as home remittances during the last month shall be included in the claim of that particular month, provided that the corresponding USD has been surrendered in the interbank market. However, the home remittances paid prior to the effective date, ie, 04-Feb-2022 shall not be eligible for claim of incentive.

Further, the home remittances for which USD was surrendered prior to 04-Feb-2022 shall also not be eligible for claim of incentive.

ECs shall be free to sell FX raised against home remittances, to any Authorized Dealer (AD)/Bank. Sale of USD/FX by the ECs to ADs for other purposes, ie, settlement of credit card payments, sale of export proceeds of foreign currencies, etc., shall not be eligible for this incentive scheme.

Copyright Business Recorder, 2022