KARACHI (our reporter):- In order to enhance the flow of home remittances through formal channels and improve foreign
exchange liquidity in the inter-bank market, State Bank of Pakistan has introduced a new incentive scheme for Exchange Companies (ECs).
Under the scheme, Exchange Companies would be required to surrender 100% of the home remittances mobilized in the interbank market and in return, they will receive PKR 1 against each USD surrendered.
The exchange companies bring home remittances with the help of Money Transfer Operators, in their accounts maintained with banks in the country.
Earlier, Exchange Companies were required to surrender a minimum 15% of the home remittances in the inter-bank market. To implement the scheme, State Bank of Pakistan has now amended its regulation governing disbursement of inward remittances by Exchange Companies. Now the exchange companies shall surrender 100% of foreign currency received by them on account of inward home remittances, in equivalent US Dollars, in the interbank market on same the day.
Since ECs mobilize a significant amount of home remittances, this scheme will help to improve the foreign exchange liquidity in the interbank market and the incentive provided is expected to encourage all exchange companies to bring more and more home remittances by reaching out to a wider set of remitters and their beneficiaries in Pakistan.
The scheme would be effective from 4 February 2022. According to the central bank, the decrease in the reserve position is due to external debt and various payments. It is noteworthy that the central bank has lost $4.346 billion since August 2021. In August of last year, SBP reserves were at a record high of $20.073 billion.ALSO READ