SBP increases incentives for exchange companies to boost remittances

The State Bank of Pakistan has increased the incentives for foreign exchange companies in order to boost remittances by the end of the fiscal year 2024-25.

The central bank announced on Tuesday that it revised the incentives for exchange companies for home remittance. The new incentives will be effective October 1.

The circular issued by the central bank stated that the ECs’ incentives have been increased to Rs4 per US dollar, and it will be provided on a fixed component with a base rate of Rs2 for each US dollar of home remittances surrendered to SBP-designated banks.

Moreover, the companies will be paid Rs4 per US dollar if the remittances increase by more than 5 percent or $25 million compared to the previous year.

Previously, the companies were receiving Re1 per dollar, which was too little compared to the incentives received by the banks.

Pakistan received $30.25 billion in remittances in FY24, but all inflows were received through the banks, and exchange companies put a very little effort by inducting $5 billion in remittances.

“We have been negotiating with the government for years to provide more incentives for the growth of the home remittances,” said Zafar Paracha, General Secretary of the Exchange Companies Association of Pakistan.

Finally, the government announced monetary incentives, which was an appreciated effort towards boosting remittances.