SBP scraps remittance fee incentive scheme
The State Bank of Pakistan (SBP) has discontinued the Telegraphic Transfer Charges Incentive Scheme (TTCIS) with effect from July 1, 2026, ending the reimbursement mechanism under which banks were compensated for waiving telegraphic transfer charges on eligible home remittance transactions.
In a circular issued on Thursday, the central bank said the scheme stood withdrawn from July 1. "It is hereby informed that the TTCIS is discontinued with effect from July 01, 2026. However, the authorised dealers shall continue to implement the scheme at their end while preserving its key features," the SBP circular read.
The directive means overseas Pakistanis using eligible formal channels to send money home are not expected to pay transfer charges despite the withdrawal of the incentive scheme. However, with the reimbursement mechanism discontinued, banks and other participating institutions are expected to absorb the cost of providing the service unless an alternative arrangement is introduced.
The TTCIS, also known as the Reimbursement of Telegraphic Transfer Charges Scheme, was introduced to encourage overseas Pakistanis to route their remittances through formal banking channels instead of informal systems such as hawala and hundi. By reimbursing banks for telegraphic transfer charges, the scheme ensured that eligible remittance transactions could be processed without imposing any fee on either the sender or the beneficiary.
The initiative formed part of Pakistan's broader strategy to increase documented remittance inflows, strengthen foreign exchange reserves and improve transparency in cross-border financial transactions. Over the years, the government and the SBP have introduced a series of measures to facilitate overseas Pakistanis and incentivise the use of banking channels for remittances.
The scheme has also been revised from time to time. Under Exchange Policy Department Circular Letter No 04 of June 30, 2025, the SBP increased the minimum eligible remittance amount from $100 to $200 and extended the facility to exchange companies alongside authorised dealers and microfinance banks. The latest circular requires financial institutions to continue providing the same fee-free service to eligible customers despite the withdrawal of the reimbursement arrangement.
The central bank also advised authorised dealers, microfinance banks and exchange companies to inform their customers and other stakeholders about the revised arrangement. However, the circular did not explain the reasons for discontinuing the incentive scheme or indicate whether another reimbursement mechanism would replace it. Workers' remittances remain one of Pakistan's most important sources of foreign exchange, alongside export earnings. In recent months, remittance inflows have remained robust, supported by higher transfers from Pakistanis living in Saudi Arabia, the United Arab Emirates, the United Kingdom and the United States. The steady growth in remittances has helped support the country's external account, strengthen foreign exchange reserves and ease pressure on the balance of payments.
The decision effectively maintains a zero-fee structure for customers but removes the government-backed reimbursement cushion that previously offset processing costs for banks. While the SBP's decision is not expected to affect remittance senders or recipients immediately, the withdrawal of the reimbursement mechanism transfers the cost of providing free remittance services to participating institutions. Whether banks continue to absorb these costs over the longer term or seek an alternative arrangement is likely to depend on future policy decisions and discussions with the central bank.