Remittance disbursement: SBP allows ECs to become sub-agents of ADs

KARACHI: The State Bank of Pakistan (SBP) has allowed Exchange Companies (ECs) to become sub-agent of banks (Authorized Dealers) for disbursement of home remittances.

In order to facilitate the disbursement of home remittances through a wide network, the SBP has decided to allow the disbursements of inward home remittances by Exchange Companies as sub-agent of Authorized Dealers (ADs).

According to the SBP, Exchange Companies are now allowed to enter into agreements with ADs to act as their sub-agents for disbursement of home remittances in PKR to beneficiaries, received by ADs through their international tie-ups.

The SBP has advised Exchange Companies to ensure the SBP guidelines for home remittance disbursement as a sub-agent of ADs. However, as an agent of ADs, Exchange Companies will not be able to get the incentive on the home remittances.

“No home remittances related incentive, as provided by the Government of Pakistan, will be claimed by the Exchange Companies for the transactions disbursed as sub-agent of an AD,” the SBP said.

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Exchange Companies will also not recover any funds from remittance recipients. However, ADs have been allowed to share with Exchange Companies any part of incentive for home remittances, as provided to ADs by the government.

All such transactions will be recorded by the Exchange Companies in their Core Business Application on real time basis; however, Exchange Companies are not required to report such disbursements to SBP under International Transactions Reporting System (ITRS), as ADs are reporting such transactions to State Bank under ITRS.

The amount disbursed under such agreement will not be accounted for the calculation of outward remittance limit, as prescribed in Para 9(iii) (c) ibid.

The SBP has warned that failure to comply with these instructions will attract enforcement action against the concerned Exchange Company under the relevant provisions of the Foreign Exchange Regulation Act, 1947.

Exchange Companies Association of Pakistan (ECAP) Chairman Malik Bostan has welcomed the SBP decision saying this was a major demand of the Exchange Companies. He hoped that this decision will ease the disbursement of home remittances through a large network as recipients will have more options.

“This will also encourage overseas Pakistanis to send more home remittances to their families in Pakistan as their recipients will receive remittances in a very convenient way,” he added.

He said that several Exchange Companies’ branches work even after the bank timings, while airport branches are operational 24 hours so that recipients can receive remittances any time.

Copyright Business Recorder, 2022