Channelling remittances: Government clears dues of commercial banks

Rs3.5b cleared, incentive given for further expansion.

ISLAMABAD: The federal government decided on Tuesday to clear the Rs3.5-billion outstanding dues of commercial banks on account of facilitation charges on formally channelling remittances, incentivising banks to further expand their networks.

The decision was taken during a meeting between the representatives of the federal government and the commercial banks.

Federal Minister for Finance Ishaq Dar said that government cleared Rs6 billion on account of payment of charges to the banks and outstanding dues of Rs3.46 billion will be cleared by March 21 to further encourage banks in their efforts, according to an official handout.

The Pakistan Peoples Party-led government had launched the Pakistan Remittance Initiative in 2009 aimed at facilitating flows of remittances in an efficient way. The federal government is paying a sum on every transaction that the banks complete.

Remittances remain the second biggest sources to meet out international financial obligations after the receipts earned on account of exports. During the first eight months of the fiscal year, workers’ remittances increased by 11% to $10.2 billion, according to the State Bank of Pakistan.

The head of PRI, Moinuddin gave a presentation to the finance minister and suggested measures to increase the flow of foreign remittances by Overseas Pakistanis to their homelands. He suggested that home remittances should be included in the list of core businesses of the banks and home remittance centers should be opened by various banks.

He further proposed to place representatives of the banks at overseas entities. He also suggested that banks should establish a dedicated remittance complaint resolution mechanism for improving home remittances through banks.

Dar asked the PRI head to formally bring the proposal and also hold consultations with all the stakeholders. Dar appreciated the efforts of the commercial banks for doubling their efforts for the improvement of flow of foreign remittances in the country. He said that high levels in remittance flows can have a direct bearing on foreign exchange rates, domestic interest rates and balance of payments, while having other indirect impact for macro-economic variables.

The federal minister directed the banks to identify the major migration networks and communicate with the leaders of these networks. The migrants will be encouraged to open bank accounts before leaving. NADRA would be requested to offer assistance in this regard.

This will help not only in understanding their preference matrix but also help the authorities in Pakistan to cover their expectations about desired remittance priorities, he added.

The finance minister said that it is the primary responsibility of the government to consolidate the fiscal and monetary situation.

Published in The Express Tribune, March 12^th, 2014.

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