SBP revises Telegraphic Transfer charges scheme, raises limit to $200, includes ECs
However, as the same, the SBP has decided to discontinue the two major remittance-related incentive schemes effective July 1, 2025.
According to the SBP, the minimum size for eligible transactions under the T.T. Charges Reimbursement Scheme has been increased to $200. While previously, banks were enjoying T.T Charges Reimbursement at a transaction of $100.
Remittances: Two incentives available to banks and ECs now
As per conditions, the Financial Institution (FIs) and their Overseas Correspondent Entities (OCEs), in the chain of transaction, will not charge their customers (beneficiary & remitter) any fee, commission and charges; etc., at any stage of sending or receiving Home Remittance transactions. FIs shall suitably incorporate a clause in their Home Remittance Disbursement Agreements with OCEs to ensure compliance of this condition.
The amount of Home Remittance transaction is not below $200 or equivalent in other currencies and transactions sent from the same remitter to same beneficiary on the same day shall be treated as one transaction and hence only one transaction shall be eligible for the Reimbursement of TT Charges; irrespective of the number of transactions.
Only five free of cost transactions in a month from a single remitter to the same beneficiary through the same OCE shall be allowed under the scheme and the transactions shall contain accurate identity of both remitter and beneficiary. Furthermore, the rebate structure has been simplified to a flat rate of SAR 20 per eligible transaction across the board.
In a key development, Exchange Companies have now been brought under the ambit of this Reimbursement of TT Charges scheme, which previously applied only to banks. This move is expected to broaden the formal remittance channel network and potentially boost inflows via non-banking financial intermediaries.
As per SBP's directives, ECs will surrender 100 percent of the foreign exchange received on account of inward home remittances, in equivalent US Dollars, in the interbank market on the same day.
The transactions by ECs for purposes other than home remittances, such as settlement of credit card payments or sale of export proceeds of foreign currencies, will not be eligible for the incentive scheme.
These revisions will come into effect from July 1, 2025, with implementation guidelines issued by the SBP. All Authorized Dealers, Microfinance Banks, and Exchange Companies have been directed to inform their stakeholders accordingly.
Additionally, in a shift away from previous incentive models, SBP has announced the discontinuation of the 'Incentive Scheme for Marketing of Home Remittances' and the 'Exchange Companies Incentive Scheme (ECIS)' from the same date.
According to SBP, any OCE having a tie-up relationship with domestic FI, shall not, directly or indirectly through an arrangement with any other entity, withhold FCY abroad for any remittance transaction intended for Pakistan.
If any OCE is found to have been involved, directly or indirectly in collusion with other OCE, in splitting of remittance transactions to gain undue benefit under the TT charges scheme, the delinquent OCE may be suspended/ debarred from dealing with Pakistani FIs and shall be obligated to return excess amount claimed. In this regard, FIs shall periodically engage with their OCEs to create awareness about the applicable rules and regulations, and possible consequences for non-compliance.
FIs must implement effective controls, including data analytical/ system monitoring tools, periodic audits; etc., to prevent OCEs from misusing the TT charges scheme. The reviews/controls shall be robust enough to prevent digressions such as splitting of remittance transactions, misreporting, disguising the identity of remitters, etc. In the event of non-compliance by an OCE, FIs shall take appropriate action in the matter and inform the Director, Exchange Policy Department, SBP accordingly.
Copyright Business Recorder, 2025
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