Latest news with #PakistanRemittancesInitiative
Business Recorder
3 days ago
- Business
- Business Recorder
PRI financing: IMF asks MoF and SBP to find a way forward
ISLAMABAD: The International Monetary Fund (IMF) has asked the Ministry of Finance and the State Bank of Pakistan (SBP) to sit together and find a way forward for financing the Pakistan Remittances Initiative (PRI) - a scheme for facilitating remittances through formal channels. This was revealed by the finance secretary, while briefing the National Assembly Standing Committee on Finance and Revenue, which met with Syed Naveed Qamar in the chair, here on Wednesday. The committee observed that the remittances' reward paid to banks and exchange companies facilitating overseas inflows through official channels is turning to be a new circular debt. The finance secretary informed the committee that due to fiscal constrain no amount has been allocated for the scheme for the current fiscal year against Rs89 billion earmarked last fiscal year, however, it crossed Rs100 billion. Even if it is paid from the SBP profit, would means indirect payment by the Finance Ministry. 'We are engaged with SBP to find a solution for financing PRI as it has already been decided to revise the scheme,' he added. Govt decides to review Pakistan Remittances Initiative The committee was informed that the reward structure — previously set between 20 to 30 riyals per incremental transaction — has now been revised to a flat rate of 20 riyals across all transaction sizes. The minimum eligible transaction threshold is being raised from $100 to $200. The committee further deliberated upon 'the parliamentary budget office bill 2025,' moved by Rana Iradat Sharif Khan envisaging to establish parliamentary budget office to enhance fiscal oversight, transparency and parliamentary security of budgetary matters. The finance secretary said there is no need of legislation for establishing budget office. Even if it is established, the office should be a lean, he added. The committee constituted a sub-committee under the convenorship of Dr Nafisa Shah for detailed deliberation on the bill and submission of its report within 30 days. Ali Zahid, Arshad Abdullah Vohra, and Muhammad Mobeen Arif, MNAs, will be the members of the newly appointed sub-committee. The committee expressed serious concern over the absence of the Industries and Production secretary, and deferred the agenda item relating to the new electric vehicle policy. The committee deferred discussion on 'The Starred Question No 40', moved by Sharmila Faruqui, MNA, 'The Starred Question No 38', moved by Aliya Kamran, MNA, 'Non-Implementation of Minimum Wages, as announced by the Federal Government in its departments'' matter raised by Syed Rafiullah, MNA, and 'Islamic Banking' matter received from Syed Iftikhar Hussain Naqvi, member Council of Islamic ideology, for the next meeting of the committee. Copyright Business Recorder, 2025
Business Recorder
10-07-2025
- Business
- Business Recorder
Govt decides to review Pakistan Remittances Initiative
ISLAMABAD: The government has decided to review Pakistan Remittances Initiative (PRI) - a crucial scheme for bringing remittances through formal channels, as payout increased by around four times while remittances by around two times during the last 10 years. Additional Secretary Finance Amjad Mehmood, while briefing the Senate Standing Committee on Finance and Revenue said that Finance Ministry took a summary into the Economic Coordination Committee (ECC) of the Cabinet and sought approval for reviewing PRI scheme. Following ECC's approval, the Cabinet has also directed for reviewing the scheme. The committee which met with Saleem Mandviwalla in the chair was briefed by Dr Inayat Hussain, deputy governor State Bank of Pakistan (SBP) on the PRI including the policy changes in the scheme over the years, including rates or other relevant aspect, along with their financial impact. Remittances: govt set to withdraw some incentives Mandviwalla stated that there is a dire need to review the PRI policy as the number of payouts increased manifold compared to the increase in remittances. Mandviwalla said that remittances were around $19 billion 10 years back, which now reached to over $36 billion; i.e., almost doubled. However, the payout under the scheme was around Rs20 billion which is now reached around Rs130 billion. Hussain said that the scheme was crucial for bringing remittances through the formal channels. He said that eligible transaction limit has been increased from $100 to $200. The committee was informed that since 2009, PRI has been working towards enhancement of home remittances through formal channels in Pakistan. As a result of active engagements with financial institutions (FIs), the number of FIs on PRI network has increased from around 25 in 2009 to more than 50 in 2024. The FIs include conventional banks, Islamic banks, microfinance banks, and Exchange Companies (ECs). Further, the Electronic Money Institutions (EMIs) are also allowed to receive home remittances by working through the banks. The number of international entities has increased from around 45 in 2009 to around 400 at present. In fiscal year 2024 alone, around 33 new international entities joined the home remittance business with the Pakistani FIs under the PRI channel. Through concerted efforts, remittance inflows have grown nearly fourfold, rising from $7.8 billion in fiscal year 2009 to $30.3 billion in fiscal year 2024. Over the past decade alone, remittance inflows have achieved an impressive 65 percent growth, reflecting their increasing significance and steady contributions to Pakistan's economy. While discussing the delay in enforcement of local currency settlement, the Chairman Committee reiterated that commercial banks issue VISA and MasterCard, who earned around $300 million from the country, without providing an option of PayPak. He further opined that all local debit cards should be linked to PayPak. The Committee recommended that commercial banks should give an option of PayPak on the form at the time of issuance of debit cards. The committee was informed that as of March 2025 of the 53 million debit and credit cards in Pakistan; about 10 million are PayPak and 2.5 million co-badged, while the rest are owned by Visa and MasterCard. The SBP informed the committee in writing that Visa/ MasterCard/ Union Pay; etc., are international payment schemes that offer card services all over the world. These schemes were established decades ago and offer many services such as online and shop-based payments. A large global network of merchants is connected with the platforms of VISA/ Master for accepting in-store and online payments. The SBP has undertaken various measures to reduce the country's reliance on these international card schemes and to promote cost-efficient, local currency-based payment instruments. Co-badging arrangements with international networks are also under development to allow broader use cases, including international and e-commerce transactions. While pricing structures of Visa/ MasterCard are governed by bilateral commercial arrangements between banks and payment schemes, SBP continues to provide strategic direction and oversight to promote fair competition and to lower the cost of digital financial services. The dominance of international payment schemes still persists due to several market factors such as (i) Strong brand recognition and global trust in Visa and MasterCard; (ii) their ability to support international and e-commerce transactions; (iii) provision of market development funds by schemes to issuing banks, and allowing discounts and promotional offers for customers. Copyright Business Recorder, 2025
Business Recorder
10-07-2025
- Business
- Business Recorder
Govt decides reviewing PRI
ISLAMABAD: The government has decided to review Pakistan Remittances Initiative (PRI) - a crucial scheme for bringing remittances through formal channels, as payout increased by around four times while remittances by around two times during the last 10 years. Additional Secretary Finance Amjad Mehmood, while briefing the Senate Standing Committee on Finance and Revenue said that Finance Ministry took a summary into the Economic Coordination Committee (ECC) of the Cabinet and sought approval for reviewing PRI scheme. Following ECC's approval, the Cabinet has also directed for reviewing the scheme. The committee which met with Saleem Mandviwalla in the chair was briefed by Dr Inayat Hussain, deputy governor State Bank of Pakistan (SBP) on the PRI including the policy changes in the scheme over the years, including rates or other relevant aspect, along with their financial impact. Remittances: govt set to withdraw some incentives Mandviwalla stated that there is a dire need to review the PRI policy as the number of payouts increased manifold compared to the increase in remittances. Mandviwalla said that remittances were around $19 billion 10 years back, which now reached to over $36 billion; i.e., almost doubled. However, the payout under the scheme was around Rs20 billion which is now reached around Rs130 billion. Hussain said that the scheme was crucial for bringing remittances through the formal channels. He said that eligible transaction limit has been increased from $100 to $200. The committee was informed that since 2009, PRI has been working towards enhancement of home remittances through formal channels in Pakistan. As a result of active engagements with financial institutions (FIs), the number of FIs on PRI network has increased from around 25 in 2009 to more than 50 in 2024. The FIs include conventional banks, Islamic banks, microfinance banks, and Exchange Companies (ECs). Further, the Electronic Money Institutions (EMIs) are also allowed to receive home remittances by working through the banks. The number of international entities has increased from around 45 in 2009 to around 400 at present. In fiscal year 2024 alone, around 33 new international entities joined the home remittance business with the Pakistani FIs under the PRI channel. Through concerted efforts, remittance inflows have grown nearly fourfold, rising from $7.8 billion in fiscal year 2009 to $30.3 billion in fiscal year 2024. Over the past decade alone, remittance inflows have achieved an impressive 65 percent growth, reflecting their increasing significance and steady contributions to Pakistan's economy. While discussing the delay in enforcement of local currency settlement, the Chairman Committee reiterated that commercial banks issue VISA and MasterCard, who earned around $300 million from the country, without providing an option of PayPak. He further opined that all local debit cards should be linked to PayPak. The Committee recommended that commercial banks should give an option of PayPak on the form at the time of issuance of debit cards. The committee was informed that as of March 2025 of the 53 million debit and credit cards in Pakistan; about 10 million are PayPak and 2.5 million co-badged, while the rest are owned by Visa and MasterCard. The SBP informed the committee in writing that Visa/ MasterCard/ Union Pay; etc., are international payment schemes that offer card services all over the world. These schemes were established decades ago and offer many services such as online and shop-based payments. A large global network of merchants is connected with the platforms of VISA/ Master for accepting in-store and online payments. The SBP has undertaken various measures to reduce the country's reliance on these international card schemes and to promote cost-efficient, local currency-based payment instruments. Co-badging arrangements with international networks are also under development to allow broader use cases, including international and e-commerce transactions. While pricing structures of Visa/ MasterCard are governed by bilateral commercial arrangements between banks and payment schemes, SBP continues to provide strategic direction and oversight to promote fair competition and to lower the cost of digital financial services. The dominance of international payment schemes still persists due to several market factors such as (i) Strong brand recognition and global trust in Visa and MasterCard; (ii) their ability to support international and e-commerce transactions; (iii) provision of market development funds by schemes to issuing banks, and allowing discounts and promotional offers for customers. Copyright Business Recorder, 2025
Express Tribune
28-06-2025
- Business
- Express Tribune
Govt urged to end bank subsidies
Listen to article An independent think tank has urged the government to choose between subsidising already-profitable banks or diverting limited fiscal resources toward productive sectors by ending the policy of banks guaranteed returns on government borrowing. The Economic Policy and Business Development (EPBD), a new policy research institute, released the statement the same day a federal cabinet body criticised excessive subsidies to banks in the name of attracting remittances. The Economic Coordination Committee (ECC) of the Cabinet was informed Friday that banks had claimed Rs200 billion under the Pakistan Remittances Initiative during the current fiscal year — Rs115 billion more than the budgeted subsidy. The EPBD stated that the current fiscal structure forces a choice between supporting economic growth and subsidising banking profits through guaranteed government payments. It argued that Pakistani businesses face structural disadvantages compared to regional peers who enjoy policies that enhance rather than restrict productive economic activity. The think tank stressed that economic growth requires policy alignment with development objectives — not bank profit maximisation. The current approach of keeping policy rates at 11% while allocating Rs7.2 trillion for domestic debt servicing ensures stagnation, while regional competitors grow their industrial and export capacity. The government has allocated Rs8.2 trillion for total debt servicing — equal to 46% of the 2024-25 budget. Of this, Rs7.2 trillion will go to domestic banks holding government securities. With 59% of public debt held in floating-rate instruments, the think tank argued that reducing policy rates from 11% to 6% would yield immediate savings. The government worsened this burden by issuing Rs2 trillion in fixed-rate Pakistan Investment Bonds (PIBs) at peak interest rates of 22% over the past two years, locking in excessive costs to the benefit of banks, it added. By cutting interest rates to 6%, in line with falling inflation, the government could save Rs3 trillion on debt servicing. Even a portion of this amount, the think tank said, could lower business costs and stimulate employment. A 6% rate would still offer banks real returns while easing debt burdens. The savings could support manufacturing revival, industrial expansion, SME financing, technology upgrades, and export growth. The statement added that Pakistan's future depends on diverting resources from guaranteed banking profits to investments that create jobs, enhance productivity, and ensure long-term growth. Pakistani businesses cannot expand or generate employment while banks earn risk-free profits from public funds. In contrast, regional economies maintain 5.5% policy rates, allocate only 25% of budgets to debt servicing, and still achieve 6% GDP growth by prioritising business development. The EPBD challenged the claim that lower interest rates fuel current account deficits. It cited the $19 billion deficit in 2021-22, which it attributed to exceptional, non-interest-sensitive imports such as $3.2 billion in COVID-19 vaccines, $15.6 billion in fuel, and $1.7 billion in smartphones. It said high interest rates did nothing to limit those imports and instead suppressed domestic activity. The think tank added that guaranteed profits have led banks to retreat from commercial lending, opting instead for risk-free government bonds. With 97.3% of bank investments tied up in government debt, virtually no capital remains for working capital, expansion, or technology adoption. Manufacturers struggle to finance inventory, exporters lose global competitiveness, and small businesses are excluded from credit. Pakistan's banks have effectively become bond traders, contributing no value to the real economy while earning from taxpayer-backed securities. The think tank also criticised the remittance structure, noting that Rs87 billion went to banks for basic transfersfunds that could instead support small businesses and entrepreneurship. Its statement came as the ECC met to deliberate the future of remittance-linked subsidies. The finance ministry has decided to end the subsidies in 2024-25 due to pressure from banks and International Monetary Fund (IMF) constraints. The State Bank of Pakistan told the ECC it could no longer offer implicit support under IMF rules. Although the ECC requested a transition plan, the finance ministry said no study has determined any positive impact of these subsidies. Officials noted that funds largely benefit banks and exchange companies, not overseas Pakistanis sending remittances. The central bank informed the ECC that remittance promotion schemes have existed since 1985, but their effectiveness remains unverified. Without reform, the remittance subsidy bill could swell to Rs500 billion in coming years, warned a finance ministry official. The think tank reiterated that businesses do not need subsidies or special treatment — just a level playing field. Reducing interest rates to 6% would bring Pakistan in line with regional rivals, restore manufacturing competitiveness, and improve global market access for exporters. Such a move would also accelerate technology adoption and job creation across sectors, the EPBD argued. Although manufacturing capacity exists, it remains underutilised due to lack of financing. With 97% of banks' balance sheets locked in public debt, there is little scope to support private sector growth. Regional countries have demonstrated that supporting businesses through growth-oriented credit policies can deliver 6% growth while maintaining fiscal stability, it added.
