SBP announces an incentive scheme to encourage home remittances

KARACHI: The State Bank of Pakistan (SBP) has declared an incentive scheme for the encouragement of home remittances.

According to the notification issued by the central bank, it states that, to promote domestic banks/micro finance banks/exchange companies which are offering home remittance payment services, a performance-based scheme has been initiated to augment their marketing/promotional/awareness efforts for home remittance products and services. The government will repay these expenses via SBP.

The details explains that, according to the scheme, Re1 per incremental US Dollar will be remunerated if home remittances surpass 15% growth in FY19 comparatively to that obtained in FY18. As per scheme’s terms and conditions, the scheme will be valid to all banks, micro finance banks and exchange companies that present home remittance disbursement services as per the rules and regulations provided by the SBP.

The banks/micro finance banks/exchange companies will have to exceed the aforementioned criteria to be eligible for the subjected scheme.

Furthermore, it will be necessary to present particulars of implementation of marketing/promotional/awareness activities once they succeed for the subjected scheme.

However, this scheme will be for a year at first and banks/micro finance banks/exchange companies shall be compensated at the end of the scheme year, based on actual performance assessment by SBP. Also, a particular on-site examination will be carried out by the SBP to observe the scheme.

In addition to this, SBP issued another notification stating some important alteration in existing instructions with instantaneous effect to further assist the banks to encourage home remittances through branch less banking (BB) channel.

Also, SBP has issued directions for the opening of Home Remittance Account (HRA) to encourage home remittances via branch less banking. The amendment states, the incentive of airtime is augmented to Rs2 against each USD received through M-Wallet. Further, the complete amount of incentive to HRA customers shall be borne by the government.

SBP has advised AFIs to make sure that all the above instructions are in line, else non- compliance will lead to various actions as per law.