Rise in remittances
Remittances from Pakistanis and people of Pakistani origin living abroad touched $8 billion so far this fiscal year, with a month left to go in tallying the annual total. This would be welcome enough news on its own were it also not for the fact that the 14 per cent increase is, to an extent, the result of a government policy known as the Pakistan Remittance Initiative. In a refreshing example of utilising some of the best-known practises from around the globe, the government has taken several measures to reduce the formal and informal transaction costs of remittances as well as the convenience for remitter and receiver. There is also an extraordinary degree of understanding of the remittance market, evident in the solutions that are tailor-made to produce tangible results. This is quite contrary to the situation some years ago when Pakistanis living and working overseas preferred to send money back home through informal channels since many found the proper route through the banking system cumbersome and complicated. (Of course, 9/11 and the ensuing war on terror changed all of that as well with much greater focus on informal money transfers to countries like Pakistan.)
For example, banks are now required to automatically deliver the remittance amount directly to the receivers’ accounts, reducing transaction time. Confirmations can be sent via text messages to both the sender and receiver. In addition, financial institutions have been encouraged to provide ever more convenient payments solutions to various utility companies and other bill collecting entities. This enables remitters to directly pay the bills of their relatives and loved ones without even the need for a phone call. To be certain, the system is evolving not because of government fiat but because it is highly profitable. Even a fraction of a percentage of $8 billion translates to millions of rupees for the financial institutions that provide the infrastructure for these services. But the government has done its part to help the system by creating a set of standards to be followed across all service providers. There may yet be issues with the remittance initiative as it currently stands, but the results speak for themselves.
For example, banks are now required to automatically deliver the remittance amount directly to the receivers’ accounts, reducing transaction time. Confirmations can be sent via text messages to both the sender and receiver. In addition, financial institutions have been encouraged to provide ever more convenient payments solutions to various utility companies and other bill collecting entities. This enables remitters to directly pay the bills of their relatives and loved ones without even the need for a phone call. To be certain, the system is evolving not because of government fiat but because it is highly profitable. Even a fraction of a percentage of $8 billion translates to millions of rupees for the financial institutions that provide the infrastructure for these services. But the government has done its part to help the system by creating a set of standards to be followed across all service providers. There may yet be issues with the remittance initiative as it currently stands, but the results speak for themselves.