The State Bank of Pakistan (SBP) Tuesday announced some more incentives to motivate banks and exchange companies for enhancement of home remittances through formal channels.

The SBP has announced to enhance the reimbursement of T T Charges against home remittances for the all Authorized Dealers in foreign exchange/microfinance banks. In addition, under performance based incentive scheme for marketing of home remittances, some more growth based slabs have been introduced to encourage banks and exchange companies for promotion of remittance products and services.

According to a SBP circular, under the Reimbursement of T T Charges scheme for banks, the prevailing rate of TT Charges may be enhanced from SAR 10 to SAR 20 for home remittances transactions between USD 100-200 (or equivalent in other currencies) with immediate effect.

Previously, some SAR 10 was being reimbursed at the amount of home remittance transaction equal to and above USD 100 but less than USD 200, while, SAR 20 for the amount of home remittance transaction equal to and above USD 200 (or equivalent in other currencies).

In addition, as per the existing incentive scheme for marketing of home remittances, ie, Rs 01 against USD 01 of remittance amount beyond 15 percent growth over last year was being paid to banks and exchange companies. As pr fresh SBP directives, under the existing incentive scheme for marketing of home remittances based on tiered growth they will get i.e. Rs. 0.50 on 5 percent growth, Rs. 0.75 on 10 percent growth and Rs. 1.00 on 15 percent growth. Workers' remittances witnessed a growth of 6 percent to $ 17 billion home remittances during July to March of FY20 compared with $16.031 billion during the same period in the preceding year (FY19).

The growth was attributed to some increase in number of Pakistanis going abroad for work and economic condition in GCC countries has been improved due to higher non-oil GDP growth. In addition, a competitive exchange rate in interbank relative to open market and an increase in the cost of living in Pakistan.

However, due to COVID-19 pandemic, the SBP is expecting that home remittances from major destinations may decline temporarily in coming months, with some transient downward impact on domestic consumption.