ISLAMABAD: The federal government has decided to increase the telegraphic transfers (TT) reimbursement to banks by 100% to promote legal channels of sending remittances to the country.
It will immediately release Rs5 billion for the new scheme. This decision was made on the recommendation of a sub-committee set up by the federal government to simplify the procedure for sending remittances by overseas Pakistanis and encourage them to use legal channels for sending money to their families.
Under the scheme, the TT reimbursement to banks has been increased from SAR 10 to SAR 20 on transferring between $100 and $200.
According to the documents available with The Express Tribune, the subcommittee has also proposed releasing an additional amount of Rs7 billion for the scheme through the technical supplementary grant during the current fiscal year.
According to the documents, the internal finance and investment additional secretary and the joint secretary chaired a meeting attended by the head of the Pakistan Remittance Initiative, a subordinate department of the State Bank, and officials from the Federal Board of Revenue, the overseas Pakistanis ministry, the Overseas Pakistanis Foundation, the National Database and Registration Authority, the Immigration and Passport Office and four major banks.
A special committee comprising of officials of the finance Ministry's internal finance wing, budget wing and the State has been set up to promote remittances. The committee will prepare a summary and send it for approval, after which the TT rate would be increased.
A summary of Rs5 billion is also being prepared for the scheme for the federal cabinet’s approval.
Remittances flow to Pakistan touched a seven-month high at $2.09 billion in December 2019 apparently due to a sharp increase in the number of people who found jobs abroad last year.
The inflow of workers’ remittances was 15% higher compared to the prior month of November 2019 and 20% higher compared to December 2018.
A banker, who heads the remittances department at a large bank, pointed out that a significant increase in Pakistanis taking up jobs in different companies abroad may have played a big role in boosting remittances to Pakistan. On average, over 1,700 Pakistanis found jobs in foreign countries every day in the year ended December 31, 2019 compared to over 1,000 people per day in 2018, according to a statement issued by the Bureau of Emigration and Overseas Employment.
However, SBP Governor Reza Baqir has pointed out that overseas Pakistanis were increasingly using informal channels for sending remittances to the country. “We are seeing that the use of formal channels for sending money [by the expatriates] is not growing as much as the use of informal channels,” he said.
“The reasons for this may be comparatively higher cost of sending money through formal channels and the many questions asked by banks from the remittance senders,” he added. Bankers and experts have estimated that the receipt of remittances through the illegal channels stood at around $8 billion a year.
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ