Pakistani banks are expected to pay around $256 million to overseas banks during the current fiscal year for processing workers’ remittances sent to Pakistan, after the government discontinued its financial support scheme for remittance-related services from July 2026. The matter was discussed before the Senate Standing Committee on Finance, where State Bank of Pakistan Deputy Governor Dr. Inayat Hussain briefed lawmakers on the costs associated with receiving remittances through international banking channels and the impact of the government’s decision to end the subsidy.
The committee was informed that Pakistani banks are required to pay charges to foreign banks and other overseas banking partners for receiving workers’ remittances into Pakistan. These charges are associated with the international processing and transfer of funds sent by overseas Pakistanis. According to the briefing, Pakistani banks have historically paid around $800 million annually to foreign banks for remittance-related services, although the amount expected to be paid during the current fiscal year is around $256 million.
Dr. Inayat Hussain explained that the government had previously supported banks through a financial scheme designed to facilitate the inflow of workers’ remittances. Under the arrangement, the government provided Rs124 billion during fiscal year 2025 and another Rs72 billion during the following fiscal year. The financial support helped banks manage costs associated with bringing remittances into Pakistan and supported the country’s efforts to maintain formal channels for money sent by overseas Pakistanis.
The government discontinued the remittance-related financial support scheme with effect from July 2026 and did not allocate funds for the programme in the current fiscal year. With the subsidy no longer available, Pakistani banks are now required to absorb the charges payable to overseas banks from their own resources. The committee was specifically informed that the banking sector is expected to incur approximately $256 million in such charges during the current fiscal year.
The change in the government’s support arrangement could increase the cost burden on Pakistani banks as they continue to process remittance inflows. The State Bank of Pakistan Deputy Governor also cautioned that if banks decide not to absorb these expenses, the charges could eventually be passed on to individuals sending money to Pakistan. Such a development could affect the cost of formal remittance transfers for overseas Pakistanis and potentially influence the choice of channels used to send money to the country.
Workers’ remittances remain an important source of foreign exchange for Pakistan and play a significant role in supporting the country’s external account. Millions of overseas Pakistanis send funds to their families and beneficiaries in the country, making the availability of efficient and affordable formal remittance channels an important part of the financial system.
The government’s decision to discontinue the financial support scheme therefore has implications beyond the banking sector. Banks will have to manage the additional costs associated with receiving international remittances while continuing to provide services to overseas Pakistanis and their families. The committee’s discussion focused on how these costs would be handled following the withdrawal of government support.
The $256 million expected payment for the current fiscal year represents the cost that banks are expected to bear for receiving remittances through overseas banking networks. While the amount is substantially below the historical annual figure of around $800 million cited during the committee proceedings, it remains a significant expense for the banking sector. The actual impact on individual banks will depend on their remittance volumes and the arrangements they maintain with overseas financial institutions.
The financial support previously provided by the government was intended to encourage banks to facilitate remittance inflows through formal channels. By helping offset costs associated with international transfers, the scheme supported banks in maintaining competitive remittance services. With the scheme now discontinued, banks will have to determine how to manage the expenses while keeping remittance services accessible to customers.
The possibility of passing these charges on to remitters is particularly relevant because transaction costs can influence how individuals choose to send money internationally. Higher costs through formal banking channels could create pressure on banks to maintain competitive pricing, particularly as overseas Pakistanis have access to multiple methods for transferring funds to beneficiaries in Pakistan.
The State Bank of Pakistan has continued to emphasise the importance of formal financial channels for remittances, as these inflows contribute to Pakistan’s foreign exchange availability and are recorded within the country’s official financial system. Banks therefore remain an important link between overseas workers and recipients in Pakistan, with international banking relationships supporting the transfer of funds across borders.
The issue was discussed as part of the Senate Standing Committee on Finance’s broader review of the remittance system and related financial matters. The committee was briefed on the government’s previous financial support, the discontinuation of the scheme and the costs that banks are now expected to manage themselves.
The change means Pakistani banks will have greater responsibility for the expenses involved in processing workers’ remittances. If banks continue to absorb the charges, the cost will be reflected in their operating expenses. If they instead transfer part or all of the cost to customers, overseas Pakistanis could face higher charges when sending funds through formal channels.
The development also places greater emphasis on the efficiency of Pakistan’s remittance infrastructure. Banks and financial institutions will need to manage international processing costs while maintaining services that allow overseas Pakistanis to transfer funds conveniently and reliably. The balance between bank costs, customer charges and the continued flow of formal remittances will remain an important consideration following the end of government support.
The Senate committee’s review highlights the financial implications of Pakistan’s remittance system at a time when workers’ remittances continue to serve as a major source of foreign exchange. With the government no longer providing funds under the previous support scheme, banks are expected to pay around $256 million in overseas charges during the current fiscal year. The State Bank of Pakistan has warned that the cost could ultimately reach remitters if banks choose not to absorb it themselves.
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