- Digital tools and banks help formal remittances grow, supporting Pakistan’s fiscal resilience and growth
Overseas Pakistanis have significantly increased their remittances in recent years, providing a much needed boost to the country’s economy. In the fiscal year FY24, remittances reached a record US$30.3 billion, marking a 10.7% increase from US$27.3 billion in FY23.
A notable highlight was March 2025, when remittances hit an all-time monthly high of US$4.1 billion, reflecting a 37%YoY increase. This surge prompted the State Bank of Pakistan to revise its FY25 remittance target upward from US$35 billion to US$38 billion.
The growth in remittances is attributed to several factors that include:
Shift to official channels: A more stable exchange rate encouraged the use of formal banking channels.
Digital platforms: The rise of fintech solutions and digital wallets made it easier for overseas workers to send money home efficiently.
Global economic factors: Economic recovery in host countries, especially in the Middle East, increased the earning capacity of expatriates, leading to higher remittances.
Saudi Arabia remains the top source of remittances, with US$808.6 million sent in June 2024 alone, a 57% increase from the previous year. The World Bank projects continued growth, forecasting remittances to reach approximately US$30 billion in 2025.
These remittances play a crucial role in stabilizing Pakistan’s economy, supporting households, and strengthening foreign exchange reserves.
Banks playing key role
Commercial banks in Pakistan play a central role in facilitating and boosting remittances from overseas Pakistanis. Their contributions have become more pronounced in recent years due to regulatory changes, technological innovations, and increasing government incentives. The key contributing factors are:
Use of official channels: Banks have expanded partnerships with international money transfer operators (like Western Union, MoneyGram, etc.) to enable fast and legal remittance transfers.
The State Bank of Pakistan (SBP) incentivizes banks under the Pakistan Remittance Initiative (PRI) to channel remittances through formal banking systems. Banks receive service charges for processing these remittances.
Digital platforms and fintechs
Banks have launched mobile apps, digital wallets, and online banking services to make it easier for beneficiaries to receive funds instantly. Services like HBL Konnect, UBL Digital App, Meezan Bank’s internet banking, and Alfalah’s Orbit app provide fast access to remitted funds.
Overseas branches and correspondent banks
Major Pakistani banks like HBL, UBL, and MCB have branches or partnerships abroad, especially in the Gulf countries, Britain, and North America. These facilitate direct deposits and account-to-account transfers with lower fees and better exchange rates.
Incentives and rewards
Some banks offer incentives like free insurance, prize draws, or bonus payments to remittance recipients. For instance, remittances sent via formal channels may make the receiver eligible for Roshan Apna Ghar (housing finance), Roshan Digital Account, and auto loan schemes.
Financial inclusion
By encouraging the use of bank accounts for remittance receipts, banks are helping bring more people into the formal financial system. This increases savings, deposits, and access to other banking services, boosting economic stability.
Compliance and regulation
Banks ensure KYC (Know Your Customer) compliance and follow anti-money laundering (AML) standards, boosting confidence in Pakistan’s remittance system globally. This has helped Pakistan maintain its status in FATF (Financial Action Task Force) assessments.
Commercial banks in Pakistan act as gateways, innovators, and regulators in the remittance process. Their efforts are critical in ensuring remittances are fast, secure, legal, and beneficial to the broader economy. This, in turn, helps stabilize the rupee, reduce the current account deficit, and support household incomes.
Exchange companies in Pakistan also play a significant and complementary role in facilitating remittances from overseas Pakistanis. While commercial banks dominate formal transfers, exchange companies offer accessibility, convenience, and speed, particularly for people without bank accounts or in remote areas.
Here’s a breakdown of their role:
- Exchange companies (ECs) partner with international money transfer services like Western Union, MoneyGram, Ria, and Xpress Money. They provide over-the-counter cash pickup services for recipients, often in areas with limited bank branch coverage.
- Many exchange companies operate widespread branch networks across Pakistan, including rural and underserved areas. This geographic spread ensures that people who may not have access to banks can still receive remittances.
- Exchange companies, regulated by the State Bank of Pakistan (SBP), play a crucial role in diverting remittances from informal hundi/ hawala systems to legal, documented channels.
Pakistan Remittance Initiative (PRI)
Like banks, exchange companies are part of the PRI, a joint initiative by SBP, the Ministry of Finance, and the Ministry of Overseas Pakistanis. Under PRI, remittances sent via exchange companies are cost-free for senders, as fees are reimbursed by the government or SBP to service providers.
Technological upgrades and digitization
Some larger exchange companies have developed apps or integrated online platforms that allow users to initiate remittance transactions digitally. These systems improve speed, reduce cash handling, and enhance customer convenience.
Currency management and liquidity
Exchange companies help convert foreign remitted currencies into PKR, providing liquidity and support to Pakistan’s foreign exchange reserves. Their operations influence open market currency rates, which can impact the rupee’s stability. Exchange companies in Pakistan serve as accessible, flexible, and vital intermediaries in the remittance ecosystem — especially for people who rely on non-banking channels. Their alignment with government policy, improved oversight, and technological upgrades have strengthened their role in supporting formal remittance flows and financial inclusion.