The State Bank of Pakistan on Saturday introduced a new payment mechanism under which five major commercial banks have begun transferring remittances into beneficiaries' accounts the same day.
The State Bank of Pakistan, under the auspices of Pakistan Remittance Initiative (PRI), has put in place the new payment mechanism whereby the banks would inform on daily basis to each other about the bank accounts to be credited with the remittances received while the funds shall route through Real Time Gross Settlement (RTGS) System simultaneously with the exchange of information.
The new mechanism will address the issue of delay in interbank settlement of remittance transactions. Allied Bank of Pakistan, Habib Bank Ltd, MCB Bank, National Bank of Pakistan and United Bank Ltd have joined the mechanism in the first phase and these banks are fully functional for this programme with complete capability and capacity. On the first day of its functioning, these banks credited Rs 100 million into beneficiaries' accounts on the same day under the new mechanism.
This is a strategic milestone for the smooth delivery of home remittances under PRI. With the successful completion of this milestone, the State Bank is now making efforts to bring more banks into this fast track payment mechanism. The goal is to integrate all the banks into payment network for smooth flow of remittances.
The new payment mechanism facilitates banks for immediate transfer of funds through Real Time Gross Settlement System (RTGS) which makes remittance funds immediately available to the participating beneficiary banks so that they can credit remitted amounts to beneficiary accounts.
It may be pointed out that the State Bank, Ministry of Finance and Ministry of Overseas Pakistanis had undertaken a joint initiative called 'Pakistan Remittance Initiative' recently with a view to facilitating the flow of remittances through formal channels. This initiative has started to materialise and remittances through formal channels are showing considerable growth.