In its bid to promote remittances, the State Bank of Pakistan (SBP) has decided to allow Exchange Companies (ECs) to maintain separate foreign currency account for each Money Transfer Operator (MTO).

The SBP in a notification on Saturday also informed that ECs can use such accounts to receive home remittances related to commission/ fee or exchange gains subject to the condition that all such funds are surrendered to the inter-bank market on the same day.

“However, incentive under this scheme will be provided only on the foreign exchange generated through home remittances,” read the notification.

Despite the resumption of international travel amid ease in Covid-19 restrictions, inflows of workers’ remittances have managed to grow, surging to $23 billion in the first nine months of this fiscal year (FY22), a year-on-year growth of 7%.

Remittances from overseas workers are a crucial source of foreign exchange reserves for Pakistan that has been in talks with the International Monetary Fund (IMF) over resumption of its bailout package. Lack of foreign exchange has also put pressure on the country's currency that has depreciated around 17% in the last 12 months.

Despite the increase in remittances, foreign exchange reserves held by the central bank have been declining, and reached $10.558 billion, due to external debt and other payments, revealed the latest data.