Scheme launched to woo remittances through banks

[LahoreEstate]

Sunday, August 23, 2009
By Saad Hasan

KARACHI: The government on Saturday launched a broad incentive scheme for overseas Pakistanis to encourage transfer of home remittances through banking channel rather than relying on cheap and speedy but illegal hawala system.

Under a Pakistan Remittance Initiative (PRI), it has bound banks to transfer wired amount in account of the receiver within 24 hours. Banks will face a penalty if they failed to comply with the deadline.

Financial incentives are also in the offing for international institutions, which are able mobilize at least $100 million in remittances in a year.

Finance Minister Shaukat Tarin, Minister for Overseas Pakistanis Farooq Sattar, Governor State Bank of Pakistan Salim Raza and top bankers gathered here at launch of the PRI.

A PRI website and a call centre have also been established to facilitate overseas Pakistanis who play a crucial role in sustaining country’s balance of payments.

Tarin said increasing the remittances is best way to get rid of dependence on international lenders. “We are hoping to double the remittances in few years,” he said. “International financial institutions lend us with strings attach. We can say goodbye to them.”

Pakistanis living abroad sent home record $7.811 billion during financial year 2008-09, beating the previous annual high of $6.451bn transferred a year before.

While remittances have become lifeline for the economy there was hardly any scheme or program to facilitate its speedy transfer. People sending home money to their families are forced to use illegal hawala network because of a lethargic bank system. “Insufficient presence of Pakistani banks in overseas jurisdictions and lack of marketing efforts are some of the major impediments to the flow of remittances,” he said.

As part the scheme, he said expatriates could also be sold government’s debt as repackaged bonds. “There is a lot of wealth with Pakistanis living abroad and a lot needs to be done to tap it.”

Governor SBP Raza highlighted the negative impact on economy from remittances coming in through informal channel. He also decried banks for not focusing on the remittance market.

“Banking sector has not aggressively engaged itself for attracting remittances. We want banks to market remittance and investment products.”

Initially, five big banks including Allied Bank, Habib Bank, MCB, National Bank of Pakistan and United Bank will be part of inter-bank setup that will ensure speedy transfer of remittances.

Farooq Sattar said his ministry in collaboration with Ministry of Labour would assists PRI to guide all overseas bound workers about official ways to remit funds. Labour Attaches posted in various overseas missions are being instructed to discourage informal channel.

The launch ceremony held at SBP auditorium also saw Presidents and CEOs of the top five banks coming one by one to share their commitment with the project. But sitting in the last rows, head of a large exchange company shook his head in despair during the proceedings. “Exchange companies are also playing role in bringing remittances. Yet again no financial incentive has been allowed to us.”

PRI follows a crackdown against two big exchange companies accused of money laundering. The hawala system is comprised of brokers who operate transnational network of off-the-book payments, which is literally untraceable.

http://www.thenews.com.pk/daily_detail.asp?id=194376