SBP sets new $200 limit for remittance rebates under revised incentive scheme starting July 2025

The State Bank of Pakistan (SBP) has announced major changes to its incentive framework for financial institutions handling home remittances, revising both the rebate rates and transaction eligibility criteria. The updated scheme, which comes into force from 1 July 2025, is aimed at further formalizing remittance flows through regulated banking channels while tightening compliance standards.

Under the new terms, the SBP has set the minimum size of eligible transactions at $200 for financial institutions to claim a rebate. Each qualifying transaction will now earn a flat rate of 20 Saudi Riyals (SAR) regardless of the transaction amount beyond the minimum threshold. This marks a notable shift from previous structures where rebates were calculated on a per $100 transaction basis, offering 20 SAR per $100 transaction last fiscal year and 30 SAR per $100 transaction in 2023-24.

The revised policy is expected to streamline incentive disbursements to banks, microfinance institutions, exchange companies, and other authorized financial intermediaries. It also aims to simplify the rebate mechanism, making it easier to audit and reducing opportunities for manipulation.

This move by Pakistan’s central bank comes at a time when remittance inflows have surged to historic highs. According to data for the first 11 months of the outgoing fiscal year, home remittances reached nearly $35 billion, with projections indicating they could cross $38 billion by the close of the year. The record-breaking inflows have been fueled by multiple factors, including attractive rebate schemes offered to financial institutions, as well as efforts by the government to clamp down on informal transfer networks like hawala and hundi.

However, alongside modifying the rebate structure, the SBP has also discontinued incentives previously granted to financial institutions to cover costs related to marketing, promotion, and Telegraphic Transfer (TT) expenses. This change is intended to redirect institutional focus purely toward efficient remittance facilitation rather than ancillary promotional activities.

The new rules further clarify how transactions will be treated under the incentive framework. Specifically, any transactions sent by the same remitter to the same beneficiary on the same day will be counted as a single transaction for the purpose of rebate eligibility. Additionally, only five free-of-cost transactions per month will be permitted from a single remitter to the same beneficiary through the same Overseas Correspondent Entity (OCE) under the scheme.

A crucial stipulation in the updated guidelines is that neither financial institutions nor their overseas partners involved in the remittance chain are allowed to charge customers—whether remitters or beneficiaries—any fees, commissions, or deductions at any point in the transaction process. This ensures that recipients in Pakistan continue to receive the full remitted amounts without hidden costs, supporting the SBP’s broader financial inclusion objectives.

Meanwhile, the banking sector, in coordination with various stakeholders, continues to work on developing robust digital channels to further encourage the use of formal remittance pathways. By strengthening legal routes, the authorities hope to divert even larger volumes away from informal markets that undermine transparency and regulatory oversight.

The SBP’s recalibrated incentive scheme reflects an evolving approach to managing Pakistan’s vital remittance economy, balancing the need for operational efficiency in financial institutions with stronger protections for millions of Pakistanis who depend on remittances as a lifeline.