February 4, 2022 (MLN): In order to encourage the Exchange Companies to mobilize home remittances, the Government of Pakistan has introduced an incentive scheme on Thursday.
According to the circular issued by SBP yesterday, exchange companies will be provided an incentive of PKR1 for each USD of home remittances surrendered in the interbank market provided that the exchange companies surrender 100% of the foreign exchange received as inward home remittances.
The scheme would be effective from February 4, 2022.
The incentive of PKR1 for each USD surrendered in the interbank market will be fixed irrespective of the exchange rate, however, it is clarified that the incentive will not be allowed to exceed 1% of the exchange rate in case of PKR appreciation, the circular said.
In order to become eligible for the incentive, the exchange companies shall open and maintain a separate foreign currency account for receiving inward home remittances through Money Transfer Operators (MTOs) and surrendering the foreign exchange in the interbank market. The said foreign currency account will be used for transactions related to inward home remittances only and any amount received as commission or exchange gain etc. from MTOs shall not be credited to this account.
The requirement for surrendering foreign exchange vide Para 9 (ii) (d), Chapter 3 of Exchange Companies Manual, has been amended accordingly, as follows, to effect above mentioned incentive scheme:
“Exchange Companies shall surrender 100% of foreign currencies received on account of inward home remittances, in equivalent US Dollars, in the interbank market on the same day”
Notice further stated that exchange companies shall maintain a complete record of transactions related to inward home remittances, amount surrendered in the interbank market and claims submitted to the State Bank of Pakistan under this scheme. The Standard Operating Procedures regarding submission of claims by the Exchange Companies will be issued separately.
Exchange Companies will ensure the availability of all relevant records for examination by State Bank’s inspection teams. The violation of any instruction on the part of Exchange Companies would attract enforcement action under the relevant provisions of the Foreign Exchange Regulation Act, 1947, it added.
Home remittances are a major source of income for families of expatriate Pakistanis and contribute significantly to the country’s economic activities. The State Bank of Pakistan together with the Government of Pakistan has introduced various policy initiatives, from time to time, to increase the flow of home remittances through formal channels, SBP said.
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