By Zafar Bhutta
The Economic Coordination Committee (ECC) is likely to approve funds of Rs7 billion for an incentive package aimed at promoting home remittances through formal channels.
Under the proposed package, the lag time will be reduced from 12 months to six months for the reimbursement of TT (telegraphic transfer) charges to banks on home remittances.
The government will also share data of overseas Pakistanis with banks for targeted marketing and the State Bank of Pakistan (SBP) will revise agreements reached under tie-ups abroad for data standardisation.
The economic decision-making body will meet on Wednesday to discuss the proposed incentive package for the overseas Pakistanis to encourage them to send home remittances through formal channels.
In order to encourage and facilitate the overseas Pakistanis in sending their remittances through official banking channels, the government is working on different proposals for enhancing the home remittances.
Sources told The Express Tribune that the prime minister had approved a proposal, in a meeting held on December 3, 2019, that included reduction in the threshold for eligible transactions from $200 to $100 and the rate of compensation at 10 Saudi riyals for the $100-200 range under the TT charges scheme.
Home remittances showed a growth of 9.7% in fiscal year 2018-19 compared with the previous year and one of the factors that contributed to the growth was the new incentive scheme that led banks and exchange companies to step up efforts to contribute to the increase in home remittances.
The Finance Division has proposed that the prevailing TT charges may be enhanced from 10 to 20 Saudi riyals for transactions between $100 and $200. It will cost an additional Rs3 billion to the government.
It proposed that the existing incentive scheme for home remittances ie Re1 against $1 of remittance beyond 15% growth over last year may now be based on tiers ie Rs0.50 on 5% growth, Rs0.75 on 10% growth and Re1 on 15% growth. It will cost the government an additional Rs600 million.
The Finance Division also said the proposed amendment to Section 101(A) of the Income Tax Ordinance 2001, as mentioned in para 4 (iii), may be implemented from July 1, 2020 through the finance bill. It will provide banks the required time to put necessary checks in place.
The Finance Division sought, in principle, approval for the issuance of loyalty cards to overseas Pakistanis. Features of the loyalty card are being finalised by commercial banks through a consultative process.