Despite overseas Pakistanis sending a record $38.3 billion in remittances during the fiscal year 2025, the government has decided to scale back the rewards it pays to banks and exchange companies that help channel these inflows through official routes. The decision was shared by the State Bank of Pakistan during a briefing to the Senate Standing Committee on Finance, highlighting concerns about ballooning costs tied to incentive payments.
At a meeting chaired by Senator Saleem Mandviwalla, SBP Deputy Governor Inayat Hussain revealed that the incentive structure has been revised. Previously, banks and exchange firms earned tiered rewards of 20, 27, and up to 35 riyals per incremental remittance transaction. This has now been simplified to a flat rate of 20 riyals, regardless of the transaction’s size. Additionally, the minimum qualifying remittance amount has been raised from $100 to $200.
Senator Mandviwalla pointed out that since the launch of the Pakistan Remittances Initiative (PRI) back in 2009-10, formal inflows have doubled from around $18–19 billion to the current $38.3 billion. However, the annual incentive payouts to financial institutions have jumped even more sharply — from roughly Rs15–16 billion to an estimated Rs130 billion. He argued this imbalance needed addressing, with a greater share of benefits ideally directed back to the remitter to encourage formal transfers.
While acknowledging the steep rise in costs, Inayat Hussain cautioned that significantly reducing incentives could risk driving remittances back into informal channels like hawala and hundi. He also noted that global money transfer operators, including platforms like MoneyGram and WallStreet, were initially hesitant to join the PRI because of system hurdles, only coming onboard once market dynamics began favoring formal flows.
The discussion also touched on how last August, the government introduced a blended incentive scheme combining fixed and variable payouts. Under that framework, banks received a base reward of 20 riyals per transaction above $100, with further incremental payments of up to 15 riyals based on additional growth targets. This model could yield as much as 35 riyals per transaction for top performers, but it also opened doors to possible manipulation.
Inayat warned that tying rewards to individual transactions, rather than total volumes, might tempt banks to break up large remittances into multiple smaller transfers to maximize payouts. Some senators called for redesigning the model to emphasize overall transaction counts to discourage such practices.
The committee didn’t stop at remittance rewards. Members also pressed banks to support Pakistan’s local payment system by promoting PayPak debit cards, arguing this would reduce unnecessary outflows of foreign exchange linked to global card networks. Senators criticized commercial banks for often failing to even present PayPak as an option to customers opening new accounts. Inayat maintained that customers were given a choice, but senators countered by citing actual account-opening documents that lacked any PayPak option.
In the end, the committee recommended mandatory offering of PayPak cards alongside international options, even suggesting that customers be allowed to carry both — using PayPak domestically and international cards for foreign transactions.
Beyond these issues, the meeting also briefly covered topics such as barter trade with Iran, allegations of undue FBR rewards, and reported harassment cases, reflecting the wide scope of economic oversight under the Senate committee’s purview.