In an attempt to facilitate remittances through formal channels, the government approved the reintroduction of an incentive scheme for the marketing of home remittances to retailers, microfinance banks, and foreign exchange companies (ECs).
The scheme will come into effect from 1 July 2021 to 30 June 2022, to cover the performance of domestic remittances for FY2021-22 compared to FY2020-21, read a circular from the State Bank of Pakistan on Monday.
For home remittances that exceed 10% growth in FY22 compared to levels achieved in FY21, banks and ECs will be rewarded with Rs0.75 for each incremental USD mobilized above 10% growth. Banks and ECs will receive Rs1 for every incremental $ mobilized above 15% growth in the current financial year compared to the previous fiscal year.
Remittances from foreign workers increased 34% year-on-year in May 2021, totaling $2.49 billion.
Domestic banks / MFBs / ECs will be rewarded Rs0.50 for every incremental $ mobilized in a five percent growth in FY22 compared to levels achieved in the previous fiscal year as marketing expense reimbursement.
The country’s central bank added that the decline generally seen on the post-Eid holidays was also smaller this year. Pakistan received remittances worth $1.87 billion in May 2020.
Overall, remittances from foreign workers stood at $26.7 billion for 11 months of the current fiscal year, an increase of 29.4% from the previous year and higher than the full 2020 fiscal year by $3. .6 billion. A large part of the flow of worker remittances during July-May FY21 came from Saudi Arabia, United Arab Emirates (UAE), United Kingdom (UK), and United States (USA).