In a bid to facilitate remittances using formal channels, the government has approved the reintroduction of an incentive scheme for the marketing of home remittances for dealers, microfinance banks, and exchange companies (ECs).

The scheme will be effective from July 01, 2021, to June 30, 2022, to cover the home remittance performance for FY2021-22 compared to that of FY2020-21, read a State Bank of Pakistan circular on Monday.

Domestic banks/MFBs/ECs will be rewarded Rs0.50 per each incremental USD mobilized over five percent growth in FY22 compared to the levels achieved in the previous financial year as marketing expenses reimbursement.

For home remittances exceeding 10% growth in FY22 compared with the levels achieved in FY21 banks and ECs will be rewarded Rs0.75 per each incremental USD mobilized over 10% growth. Banks and ECs will be paid Rs1 each incremental USD mobilized over 15 percent growth in the current financial year as compared to the previous financial year.

Remittances from overseas workers increased 34% year-on-year in May 2021, amounting to $2.49 billion.

Remittances increase 34% year-on-year to near $2.5 billion in May

The country's central bank added that the dip usually experienced post-Eid holidays was also smaller this year. Pakistan received remittances amounting to $1.87 billion during May 2020.

Overall, remittances from overseas workers stood at $26.7 billion during 11 months of the ongoing fiscal year, up 29.4% from a year ago and higher than the entire FY2020 level by $3.6 billion. A large part of workers’ remittance inflow during July-May FY21 came from Saudi Arabia, United Arab Emirates (UAE), United Kingdom (UK), and the United States (US).