KARACHI: The State Bank of Pakistan (SBP) on Thursday introduced an incentive scheme of surrendering dollars of home remittances for exchange companies.
The scheme is operational from February 04, 2022, the SBP said in a circular.
Home remittances are a major source of income for families of expatriate Pakistanis and contribute significantly in country’s economic activities.
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The SBP together with the government has introduced various policy initiatives, from time to time, to increase the flow of home remittances through formal channels.
In order to further encourage the exchange companies to mobilize home remittances, the government has decided that the exchange companies will be provided an incentive of Re1 for each US dollar of home remittances surrendered in interbank market provided that the exchange companies surrender 100 per cent of the foreign exchange received as inward home remittances.
The incentive of Re 1 for each US dollar surrendered in interbank market will be fixed irrespective of exchange rate, however, it is clarified that the incentive will not be allowed to exceed one per cent of exchange rate in case of Pak Rupee appreciation.
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In order to become eligible for the incentive, the exchange companies shall 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.
The said foreign currency account will be used for transactions related to inward home remittances only and any amount received as commission or exchange gain etc. from MTOs shall not be credited in this account.
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The requirement for surrendering foreign exchange vide Para 9 (ii) (d), Chapter 3 of Exchange Companies Manual, has been amended accordingly, as follows, to effect above mentioned incentive scheme: “(d) Exchange Companies shall surrender 100 per cent of foreign currencies received on account of inward home remittances, in equivalent US Dollars, in the interbank market on the same day.”
The exchange companies shall maintain complete record of transactions related to inward home remittances, amount surrendered in the interbank market and claims submitted to the State Bank of Pakistan under this scheme.
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The Standard Operating Procedures regarding submission of claims by the Exchange Companies will be issued separately.
The exchange companies will ensure availability of all relevant record for examination by State Bank’s inspection teams. The violation of any instruction on the part of Exchange Companies would attract enforcement action under the relevant provisions of the Foreign Exchange Regulation Act, 1947, the SBP added.
