Promoting low-cost formal remittance

channels and financial literacy

The views expressed in this presentation are the views of the author and do not necessarily reflect the views or policies of the Asian
Development Bank Institute (ADBI), the Asian Development Bank (ADB), its Board of Directors, or the governments they represent.
ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their
use. Terminology used may not necessarily be consistent with ADB official terms.
 Emigration Data
49.21%

Around 9 million Pakistanis live abroad

28.34%

16.23%

4.05%
1.30%
0.90%

Middle East Europe Americas South East Asia Africa Australia & New
Zealand
Number of Pakistanis went for employment
abroad during the last 5 years
946571

752466

689932
638587
622714

2012 2013 2014 2015 2016 (September)

 Mode of Recruitment

Direct Employment (Own

Sources)
40%
Indirect Employment
(Overseas Employment
Promoters)
60%
Major destinations of Pakistani Manpower

I
Skills composition of manpower, 2015

Bureau of Emigration and Overseas Employment occupation categories:

Highly qualified: doctor, dentist, engineer, teacher, accountant and manager.
Highly skilled: nurse, foreman/supervisor, technician, operator, surveyor, carpenter, computer programmer/analyst designer,
pharmacist, rigger, draftsman, photographer and artist.
Skilled: welder, secretary/stenographer, storekeeper, clerk/typist, mason, carpenter, electrician, plumber, steel fixer, painter mechanic,
cable jointer, driver, tailor, fitter, denter, goldsmith, blacksmith, salesperson.
Semi-skilled: cook and waiter.
Unskilled: agriculturist, labourer and farmer
 Home Remittances
Pakistan Remittance Initiative (PRI)
2009
 Where We Were before PRI?

FY 08 USD 6.4 billion

No owner of home remittance business

No Marketing: Right Consumer behavior was not being

encouraged and wrong behavior was not being discouraged

No Policy Direction to formal players for increase in

remittance business

No investment by banks in systems and HR as Home

Remittance was not considered to be a viable business option

No Awareness amongst different stakeholders including

Government, banks, remitters and recipients
 Pakistan Remittance Initiative

PRI was launched in August 2009.

PRI is a joint initiative of State Bank of Pakistan, Ministry

of Finance and Ministry of Overseas Pakistan & HRD.

The objective of PRI is to create efficiency and to support

faster, cheaper, convenient flow of remittances through
formal channels.

PRI followed a simple remedy: beat informal operators by

achieving similar level of efficiency and by providing a
more secure and credible payment mechanism.
 Main features of PRI

Enhanced outreach and networks

Transaction reimbursement scheme

Improvements in payment system infrastructure and

access

Home remittance cells

Non-resident Pakistani accounts

Complaints handling and feedback mechanism

 Enhanced Overseas & Domestic Outreach

Overseas Outreach: Banks, MTOs, MSBs/ Exchange Companies

1. Banks:
Pakistani banks have a number of agency arrangements with overseas banks for
remittance mobilization. This arrangements are very effective in middle east and
especially plays an effective role in facilitating remittances from Saudi Arabia to
Pakistan.

2. MTOs (Money Transfer Operators):

These overseas tie-ups exist around the globe. They work on agent based model having
no real time presence on sending or receiving locations except their authorized
agents. Pakistani Banks, Exchange Companies and Post office have agency
arrangements with these MTOs.

3. MSB (Money Service Business)/ Exchange Companies:

Pakistani Banks have a large number of bilateral arrangements with MSBs/ Exchange
Companies around the world. These arrangements facilitate Pakistani Diaspora to
send remittance from any jurisdiction to Pakistan efficiently.
 Enhanced Overseas & Domestic Outreach
Domestic Outreach: Banks, Exchange Companies, Pakistan Post and Telcos

1. Banks:
Pakistani banks have a huge foot print across the country. Almost all the
banks have their bilateral arrangements with overseas entities i.e. Banks,
MTOs and MSBs.

2. Exchange Companies:
All Full Fledged Exchange Companies in Pakistan have their bilateral
arrangements with overseas MTOs only.

3. Pakistan Post Office:

To utilize Pakistan Post outreach in far flung areas across the country,
Pakistan Post has bilateral arrangement with M/s Western Union.

4. Telcos:
Almost all Telcos are also engaged in disbursing remittance payments under
agreements with their counterpart financial institutions.
.
 Transaction Reimbursement Scheme

The SBP reimburses banks in Pakistan the

equivalent of 25 Saudi riyals (SAR) in
Pakistani rupees per remittance
transaction provided that the remitter and
beneficiary are not charged any remittance
fee.
Improvements in payment system infrastructure
and access

The SBP built an application to transfer

remittances to the Inter Bank Fund Transfer
system (IBFT), as a result of which banks credit
the amounts immediately and settle across each
other at the end of the day.
Cash Over the Counter (COC) payments of
remittances - this enables beneficiaries to
receive their remittance payments over the
counter even when they do not have bank
accounts.
 Contd.

SMS notification system whereby the remitter

and beneficiary receive alerts after the
remittance is credited to the beneficiarys
account or in the system for cash payment at the
counter.

Encouraging the installation of ATMs and

promoting the use of e-banking and m-banking.
 Home remittance cells

Encouraged banks to set up internal

departments, called home remittance cells.

Developed complementary banking services for

beneficiaries - includes remittance-funded debit
cards which can be used at ATMs and are tax-
free.
 Non-resident Pakistani accounts

Started in 2011, these non-resident Pakistani

(NRP) accounts can be used to invest in Pakistan
Investment Bonds (PIBs), treasury bills, or other
national savings schemes and therefore tie in
with a long term aim of the PRI to create
investment opportunities in Pakistan for
overseas Pakistanis.
Complaints handling and feedback mechanism

A 24/7 call center was established in 2009 to

handle inquiries and complaints related to
remittance services from overseas Pakistanis
and their families.
 RESULT
18,720

15,838

13,922
13,187
Million USD

11,201

8,906
7,811

6,451
5,494
4,600
4,169

FY05 FY06 FY07 FY08 FY09 FY 10 FY 11 FY 12 FY 13 FY14 FY15

 HOME REMITTANCES AS PERCENT OF GDP

as percent of GDP (RHS) Remittances (Million US$)

20,000 7.0%
6.4%
6.1%
18,000 18,720 6.0%
5.7%
5.6%

16,000 5.0%
4.8% 5.0%
15,832
4.5%
14,000
3.7% 13,920 4.0%
13,186
12,000
3.0%
11,201
10,000

2.0%
8,000 8,906

7,811

6,000 1.0%
6,451

4,000 0.0%
FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15
REGION-WISE DISTRIBUTION - HOME REMITTANCE - FY15
18720 Million USD, % Share

Saudi Arabia
U.A.E.
5,630
4,232
30%
22%

U.K.
2,376 Other GCC Country
13% 2,173
12%
USA
2,703
14%

EU Countries
364
Others Countries 2%
1,242
7%
 Financial Literacy

PRI, State Bank of Pakistan

Bureau of Emigration & Overseas Employment

Overseas Pakistanis Foundation

Migrant Resource Centre

Training Programme Migrant Workers to GCC

Counties
 PRI, State Bank of Pakistan
1. Pre-Departure Briefing Program:
PRI in coordination with Bureau of Emigration & Overseas Employment (BE&OE)
and commercial banks conducted a financial training program at all seven
Protectorate Offices throughout Pakistan. Further, PRI standees with corridor
specific brochures are placed at Protectorate Offices and airports, to provide
basic information related to (a) sending agents in host country; (b) domestic
financial institutions; and (c) contact number of PRI call center, website, etc.

2. Seminars and Workshops:

PRI have organized various training programs/awareness sessions for various
government departments and at universities related to various facets of
remittance services ranging from strategic framework for remittance services,
policy level initiatives and menace of informal remittance system.

3. Media Campaign:
PRI is formulating media campaign in coordination with SBP. The proposed
campaign will be carried out in print and electronic media, including special
events in small towns with the coordination of banks, conferences with the
coordination of electronic media, advertisement through cable TVs and at
cinemas in major remittance rich areas.
BUREAU OF EMIGRATION & OVERSEAS EMPLOYMENT

24
 OVERSEAS PAKISTANIS FOUNDATION
FOREIGN EXCHANGE REMITTANCE CARD (FERC)

The Scheme introduced to facilitate those overseas Pakistanis who remit

money through normal banking channels.
Free issuance and renewal of passport on urgent basis.
Separate counters for special handling at arrival and departure
lounges at all international airports in Pakistan.
Duty credit other than as admissible under baggage rules 2006.

S.NO. Type Of FERC Duty Credit in Rs.

1. Silver US $ 2500 or more 10,000
2. Silver Plus US $ 5000 or more 20,000
3. Golden US $ 10,000 or more 30,000
4. Golden Plus US $ 25,000 or more 50,000
5. Platinum US $ 50,000 100,000
 Migrant Resource Centre (MRC)

1. Development of
awareness raising
material
2. TSWS for Saudi Arab
and UAE
3. TSWS for Qatar (under
development)
4. Information Brochures
Training Programme Migrant Worker to GCC Counties

National Vocational & Technical Training

Commission of Pakistan has developed the course
for all Technical and Vocational Training institutes.
Module 1: Overseas Employment Process
Module 2: Travelling to GCC Countries as a
Migrant Worker
Module 3: Post Arrival Settlement
Module 4: Return and Reintegration
Module 5: Communication Skills
Thank You