Govt approves Rs78bn incentive package to boost remittances

The Economic Coordination Committee (ECC) has approved a Rs78 billion incentive package for commercial banks and foreign exchange companies to attract higher foreign remittances.

The package, which revises incentives under the Reimbursement of Telegraphic Transfer (TT) Charges scheme and the Incentive Scheme for Exchange Companies, allocates Rs68 billion for commercial banks and Rs10 billion for exchange companies.

The ECC’s decision follows a 10.7% increase in remittances last fiscal year, reaching $30.3 billion, a rise attributed to the Finance Ministry’s Remittances Initiative Scheme.

The incentive for telegraphic transfers was increased from 20 Saudi Arabian Riyals (SAR) to 30 SAR in the last fiscal year. 

The ECC has now approved a flat reimbursement rate of SAR, divided into fixed and variable components. The fixed incentive is set at SAR 20 for all eligible transactions of $100 or more. 

Banks showing up to a 10% increase in remittances will receive an additional SAR 8, and those with over 10% growth will get an extra SAR 7, bringing the total possible benefit per $100 transaction to between SAR 28 and SAR 35.

The ECC also approved increased incentives for exchange companies, dividing the benefits into fixed and variable charges. 

Currently, exchange companies receive Rs1 additional for every dollar mobilized upon submitting 100% foreign exchange. 

The ECC has now increased the fixed benefit to Rs2 per $100 surrender. Companies showing a 5% increase in mobilization or $25 million, whichever is lower, will receive Rs3 per $100, while those exceeding 5% growth will earn Rs4 per $100.