Karachi, September 21, 2023 – The State Bank of Pakistan (SBP) announced the introduction of cash slabs as part of incentive schemes to promote remittances and encourage domestic financial institutions (FIs) to increase their marketing efforts for mobilizing home remittances through formal channels.
The Government of Pakistan has approved revisions in the incentive scheme to incentivize FIs for their efforts in boosting home remittances. Under this performance-based incentive, financial institutions will receive rewards by the end of the current financial year (FY2023-24) if their home remittance mobilization efforts lead to growth compared to the previous year (FY2022-23).
The cash incentives will be determined based on the incremental home remittances achieved by the FI in three slabs:
— Up to five percent increase: Rs 1 per USD
— Between five and ten percent increase: Rs 2 per USD
— Over ten percent increase: Rs 3 per USD
This incentive scheme is set to become effective from FY2023-24 onwards on a perpetual basis, aiming to provide an ongoing encouragement for FIs to channel more home remittances through formal means.
Additionally, the SBP also announced the reimbursement of Telegraphic Transfer (TT) charges for eligible home remittance transactions. The reimbursement rate for TT charges for eligible home remittance transactions will be SAR 30.
This increase in the TT charges rate will be effective for home remittance transactions received in Pakistan after thirty days from the date of the circular’s issuance.
These initiatives are part of the government’s efforts to promote the use of formal channels for remittances, which can contribute to the country’s economic stability and financial inclusion while reducing the reliance on informal remittance channels.