Pakistan Abolishes Bank Remittance Incentives Following IMF Scrutiny
The State Bank of Pakistan has discontinued two key incentive programs for banks aimed at increasing remittances, following scrutiny from the International Monetary Fund (IMF). The Sohni Dharti Remittance Programme (SDRP), which awarded reward points for remittance transactions, will cease awarding new points from July 1, 2026. Transactions processed up to June 30, 2026, will still be eligible for points, and existing accumulated points can be redeemed until June 30, 2027, after which the SDRP will be fully non-functional.
Additionally, the Telegraphic Transfer Charges Incentive Scheme (TTCIS) is also being discontinued effective July 1, 2026. Under this scheme, banks were compensated for keeping remittance transfers free for users. While the scheme is ending, Authorized Dealers will continue to ensure that home remittance transactions remain free for senders and beneficiaries. Sources indicate that the TTCIS involved significant annual amounts, estimated between Rs100 billion and Rs120 billion, which attracted the IMF's attention due to its scale and lack of performance linkage. Despite these changes, the Pakistan Remittance Initiative (PRI), another significant profit driver for banks on remittances, remains in place. Pakistan has seen substantial growth in remittances, reaching $40 billion in FY25 and projected to be around $41-42 billion in FY26, driven by increased labor exports.
The discontinuation of bank remittance incentives by the State Bank of Pakistan, prompted by IMF oversight, reflects a broader trend of increased international financial institution scrutiny over national economic policies. The substantial annual payouts under the TTCIS, estimated at Rs100-120 billion, suggest a significant fiscal commitment that, while intended to boost remittances, may have been viewed by the IMF as an inefficient or opaque allocation of resources, potentially impacting fiscal sustainability or exchange rate management. The continued operation of the Pakistan Remittance Initiative (PRI) indicates a strategic decision to retain core mechanisms for attracting foreign exchange while adjusting specific incentive structures. This move underscores the ongoing tension between incentivizing private sector participation in national economic goals and adhering to international financial norms and transparency requirements, particularly in the context of Pakistan's engagement with the IMF.
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