Six incentive schemes of SBP: ECC approves proposal to modify parameters
The Economic Coordination Committee (ECC) of the Cabinet has
given the green light to the State Bank of Pakistan (SBP)'s proposal for
altering the contours of six incentive schemes. The aim is to enhance the
inflow of remittances and promote optimal remittance through formal channels.
The meeting, chaired by Finance Minister Ishaq Dar on Monday,
reviewed a summary presented by the Finance Division concerning revisions in
home remittance incentive programs.
Following deliberation, the ECC endorsed the modifications suggested by the SBP regarding six incentive schemes. These changes are
designed to augment remittance inflow and encourage the utilization of formal
remittance channels.
It was revealed that the government has been administering six
incentive schemes in collaboration with the SBP to attract home remittances and
stimulate the flow of remittances through official channels.
Remittances hold substantial importance in sustaining Pakistan's
external accounts, stimulating economic activities, and supplementing the
disposable incomes of households dependent on remittances.
During the fiscal year 2021-22, remittances reached the value of
$31 billion. However, there was a decline observed in the fiscal year 2022-23,
with home remittances dropping to $27 billion. To bolster remittance inflow, a
budget allocation of Rs79.5 billion has been made for the ongoing fiscal year,
a significant increase compared to the Rs20 billion allocated in the fiscal
year 2022-23.
The SBP has proposed modifications to the incentive schemes to
ensure optimal remittance inflow via formal channels. These schemes were
initially introduced with the approval of the ECC and Cabinet. Therefore, the
SBP's proposed adjustments are now under the ECC's consideration for approval.
Among the proposed changes, the SBP recommends an increase in
the existing reimbursement rate for TT charges from 20 SAR/100 US$ transactions
to 30 SAR/100 US$ transactions.
Additionally, under the Marketing Incentive Scheme for the
Promotion of Home launched in 2023-24, the SBP proposes making the scheme
permanent like others. The performance-based cash incentive rate for Financial
Institutions (Fls) is suggested to be revised to Rs1 incremental US$ for growth
up to five percent over the previous year, Rs2 incremental US$ for growth
exceeding five percent and up to ten percent over the previous year (earlier it
was Rs0.75). For growth exceeding 10 percent from the previous year, a cash
incentive of Rs3 incremental US$ is proposed (previously 1 PKR over 15 percent
growth).
The SBP also suggests including two additional avenues, a bill
payment facility, and the PayPak Card (a Pakistani Debit Card) for spending
redeemed points, in the Sohni Dharti Remittance Programme (SDRP).
Furthermore, the SBP proposes the authority to determine the
minimum surrendering requirement for Exchange Companies (ECs) in the Interbank
market at the same incentive rate as the Incentive Schemes for Exchange
Companies (EC) to surrender FX in the Interbank market scheme launched to
incentivize ECs with Rs1/US$ upon 100 percent surrender in the Interbank
market.
Lastly, the SBP introduced a new initiative called the Lucky
Draw Scheme while suggesting the discontinuation of the M Wallet Scheme.
Source: Business Recorder