Latest news with #MTOs
Business Recorder
2 days ago
- Business
- Business Recorder
PBA refutes reports on remittance subsidies to banks
The Pakistan Banks Association (PBA) rejected on Monday what it called 'misleading assertions' in recent press coverage suggesting that government subsidies to banks under remittance incentive schemes serve no economic purpose. 'Such narratives dangerously undermine public confidence at a time when Pakistan's financial stability depends on robust formal remittance flows,' PBA statement read. It further said when the Pakistan Remittance Initiative (PRI) was conceptualised in 2008, formal remittances stood at only $6.5 billion, while an estimated $20 billion flowed through undocumented hawala/hundi channels, exacerbating balance of payments pressures. 'The PRI, launched in 2009, was a homegrown solution to shift flows to formal banking channels, offering an initial incentive of SAR 20 per transaction, approximately 2.25% of the average $500 transaction, which was far more viable than foreign borrowings carrying interest rates above 3.5% plus long-term repayment obligations and exchange rate risks. In contrast, PRI incentives are one-time PKR payments with no repayment liability, making them a strategic win-win for Pakistan's economy.' The PBA was of the view that banks do not profit from the incentives. 'In reality, they bear enormous costs to remain competitive, offering higher rebates and FX premiums to Money Transfer Operators (MTOs) and remitters abroad. These costs are only partially offset by government incentives, with the remainder absorbed by banks to maintain essential liquidity for import payments and economic stability.' For example, it added, banks often pay Rs3-5 per USD premium over interbank rates to attract flows that would otherwise revert to hawala, incurring direct losses in the national interest. 'Contrary to claims, banks invest heavily in compliance systems, international correspondent banking relationships, technology platforms, and customer outreach to process remittances securely and efficiently,' the PBA said. Approximately 90% of rebates before FY25 and over 100% under FY25 schemes were passed directly to international partners, leaving no direct profit for banks, according to the association. 'Furthermore, banks pay their partners upfront while government reimbursements are delayed by months, imposing significant working capital costs. 'Banks submit monthly data of PRI remittances to SBP, duly reviewed and certified by Internal Audits of the Banks. SBP also conducts review of this certified data before making payment of incentive under the scheme.' Allegations that banks manipulate remittance data, launder undeclared funds, or facilitate tax evasion 'are baseless', the PBA said. It further said banks operate under strict SBP regulations, AML/CFT frameworks, and independent audits. The classification of freelancer and IT exporter earnings as remittances is a policy classification issue needing regulatory clarity, not bank misconduct, the press release stated. 'It is telling that such narratives are often promoted by vested interests seeking to dismantle the formal banking remittance ecosystem to divert flows back into their networks. These banking-led initiatives have been instrumental in ensuring Pakistan's compliance with global AML/CFT standards, preventing potential blacklisting that would cripple the economy. 'Pakistan's banks continue to offer competitive FX rates despite incurring losses, solely to preserve formal flows. Without these incentives, remittances would revert to undocumented channels, undermining fiscal sustainability and increasing dependence on costly foreign borrowing.' According to the PBA, the suggestion that banks are subsidised 'ignores the economic reality that these incentives ensure secure, documented, and traceable remittance flows critical for Pakistan's economy'. 'Banks remain among the country's largest taxpayers and employers, paying over Rs850 billion in taxes annually, while financing every facet of national economic activity. 'Mischaracterising their role only weakens public trust at a time when economic unity and realism are paramount.' The PBA said while modalities could be improved over time, PRI remained a strategic success story. 'The PBA remains committed to working with policymakers to strengthen Pakistan's economy, maintain global compliance, and safeguard financial stability, but rejects in the strongest terms any narrative driven by vested interests that undermines the banking sector's contributions and national economic security. 'PRI is an essential driver striving for Pakistan's financial independence and diversion from reliance on international debt and forex assistance,' the press release read.
Express Tribune
3 days ago
- Business
- Express Tribune
PBA refutes misleading claims on remittance subsidies
Listen to article The Pakistan Banks Association (PBA) rejected on Monday misleading assertions in recent press coverage suggesting that government subsidies to banks under remittance incentive schemes serve no economic purpose. In a detailed statement, the PBA cautioned that such narratives risk undermining public confidence in formal remittance channels at a time when financial stability relies on documented foreign inflows. "When the Pakistan Remittance Initiative (PRI) was conceptualised in 2008, formal remittances stood at only $6.5 billion, while an estimated $20b flowed through undocumented hawala/hundi channels, exacerbating balance of payments pressures," read the statement. The PRI, launched in 2009, was a homegrown solution to shift flows to formal banking channels, offering an initial incentive of SAR 20 per transaction, approximately 2.25% of the average $500 transaction, which was far more viable than foreign borrowings carrying interest rates above 3.5% plus long-term repayment obligations and exchange rate risks, it added. "In contrast, PRI incentives are one-time PKR payments with no repayment liability, making them a strategic win-win for Pakistan's economy. Banks do not profit from these incentives." In reality, they bear enormous costs to remain competitive, offering higher rebates and FX premiums to Money Transfer Operators (MTOs) and remitters abroad, according to the statement. These costs are only partially offset by government incentives, with the remainder absorbed by banks to maintain essential liquidity for import payments and economic stability. "For example, banks often pay Rs3-5 per USD premium over interbank rates to attract flows that would otherwise revert to hawala, incurring direct losses in the national interest," explained PBA. "Contrary to claims, banks invest heavily in compliance systems, international correspondent banking relationships, technology platforms, and customer outreach to process remittances securely and efficiently," it added. Approximately 90% of rebates before FY25 and over 100% under FY25 schemes are passed directly to international partners, leaving no direct profit for banks, according to PBA. Furthermore, banks pay their partners upfront while government reimbursements are delayed by months, imposing significant working capital costs. Banks submit monthly data of PRI remittances to SBP, duly reviewed and certified by Internal Audits of the Banks. SBP also conducts review of this certified data before making payment of incentive under the scheme. Allegations that banks manipulate remittance data, launder undeclared funds, or facilitate tax evasion are baseless, read the statement. Banks operate under strict SBP regulations, AML/CFT frameworks, and independent audits. The classification of freelancer and IT exporter earnings as remittances is a policy classification issue needing regulatory clarity, not bank misconduct. It is telling that such narratives are often promoted by vested interests seeking to dismantle the formal banking remittance ecosystem to divert flows back into their networks, maintained PBA. "These banking-led initiatives have been instrumental in ensuring Pakistan's compliance with global AML/CFT standards, preventing potential blacklisting that would cripple the economy. Pakistan's banks continue to offer competitive FX rates despite incurring losses, solely to preserve formal flows. Without these incentives, remittances would revert to undocumented channels, undermining fiscal sustainability and increasing dependence on costly foreign borrowing. The suggestion that banks are subsidised ignores the economic reality that these incentives ensure secure, documented, and traceable remittance flows critical for Pakistan's economy." Banks remain among the country's largest taxpayers and employers, paying over Rs 850b in taxes annually, while financing every facet of national economic activity. Mischaracterising their role only weakens public trust at a time when economic unity and realism are paramount, according to PBA. While modalities can be improved over time, PRI remains a strategic success story. "The PBA remains committed to working with policymakers to strengthen Pakistan's economy, maintain global compliance, and safeguard financial stability, but rejects in the strongest terms any narrative driven by vested interests that undermines the banking sector's contributions and national economic security," read the statement. PRI is an essential driver striving for Pakistan's financial independence and diversion from reliance on international debt and forex assistance.
Business Insider
3 days ago
- Business
- Business Insider
Ghana's national bank blacklists 10 unlicensed money transfer firms
As part of efforts to safeguard Ghana's financial system, the Bank of Ghana (BoG) has issued a stern warning to Ghanaians and financial service providers to steer clear of specific Money Transfer Organisations (MTOs) operating without the required regulatory approval from the Apex bank. The Bank of Ghana (BoG) has warned against engaging with unlicensed Money Transfer Organizations (MTOs). Ten firms were identified for allegedly violating Ghanaian financial laws by operating without necessary approvals. Financial providers are instructed to avoid collaboration with these entities or face significant penalties. In a statement released on its website on June 27, and cited by The High Street Journal, the Bank identified ten unlicensed money transfer firms allegedly conducting foreign exchange and remittance activities in violation of Ghanaian financial laws The BoG emphasized that these entities are neither licensed nor authorised to operate within the country's financial ecosystem. 'A person shall not engage in the business of dealing in foreign exchange without a licence issued under this Act,' the Bank quoted from Section 3.1 of the Act. It further emphasized that all foreign exchange transfers to or from Ghana must be done through licensed operators, stressing that unapproved MTO s not only break the law but also undermine public trust and also expose users to the risk of fraud, data misuse, or loss of funds. The unlicensed organizations named are: ACE Money Transfer Remit Union Remit Home Roze Remit Monty Global Nairagram i-Transfer Hurupay Eversend Izi Send The Bank of Ghana's directive was particularly accorded to local banks, Dedicated Electronic Money Issuers (DEMIs), and Enhanced Payment Service Providers (EPSPs), instructing them to avoid all forms of engagement with these blacklisted entities. Licensed MTO s were also reminded to channel all forex flows through approved partners and adhere to operational standards or face penalties. 'Non-compliance will result in severe sanctions, including the withdrawal of the licence of the institution in breach,' the Bank warned. To help the public make informed decisions, the BoG has provided a complete list of authorised money transfer providers on its official website. The central bank further urged Ghanaians to verify the licensing status of any MTO before initiating transactions. According to the BoG, these regulatory provisions are in place to maintain the integrity, transparency, and security of the country's financial system. This announcement forms part of the BoG 's ongoing efforts to sanitise Ghana's remittance and forex market, particularly as digital payments and cross-border money transfers gain popularity.
