Home remittances: SBP announces incentive scheme

Business Recorder

 

The State Bank of Pakistan (SBP) has announced an incentive scheme for promotion of home remittances. According to a circular issued on Monday, in order to encourage domestic banks/ microfinance banks/exchange companies providing home remittance disbursement services, a performance based scheme has been developed to enhance their marketing/promotional/awareness efforts for home remittance products and services. The Government of Pakistan (GOP) will reimburse these expenses through SBP.

As per scheme Rs 1 per each incremental USD will be paid if home remittances exceeding 15 percent growth in FY19 compared with the levels achieved in FY18. According to scheme terms & conditions, the scheme will be applicable to all banks, microfinance banks and exchange companies that offer home remittance disbursement services as per the rules and regulations issued by the SBP from time to time on home remittances.

Banks/microfinance banks/exchange companies will have to surpass the aforesaid criteria to qualify for the subject scheme. Banks/microfinance banks/exchange companies will be required to submit details of execution of marketing/promotional/awareness activities once they qualify for the subject scheme.

The scheme will be for one year initially and banks/microfinance banks/exchange companies shall be reimbursed at the end of the scheme year, based on actual performance assessment by SBP. A special on-site inspection may be conducted by the State Bank of Pakistan to monitor the scheme. In addition, State Bank, through another circular, has also made some amendments in existing instructions with immediate effect to further facilitate banks to promote home remittances through Branchless Banking (BB) Channel.

SBP has already issued instructions for opening of Home Remittance Account (HRA) for the promotion of home remittances through branchless banking As per amendment, the incentive of airtime is increased to Rs 2 against each USD received through M-Wallet. Further, the entire amount of incentive to HRA customers shall be borne by the Government of Pakistan.

Besides instructions contained in para 4(1) of Annexure “A” of the Regulations relating to Special L-1 account/ sub account of L-1, the Authorized Financial Institutions (AFIs) can also use single account for both Home Remittances and inland transactions. In case of single account, AFIs shall keep track of transactions (Home Remittances & Inland) separately and implement controls related to privileges/ transactions limits on both types of transactions as per regulatory requirements. SBP has advised AFIs to ensure compliance with above instructions as non-compliance shall be dealt with, in accordance with the relevant provisions of law.