State Bank and banks launch Pasban Scheme to encourage formal remittances
Pakistan's banking industry, jointly with the State Bank of Pakistan and under the aegis of the Pakistan Banks Association, has launched the Pasban Scheme, a nationwide incentive scheme designed to recognise the contribution of overseas Pakistanis while encouraging greater remittance flows through formal banking channels.
The scheme was announced at a launch event at the State Bank, chaired by Mr Jameel Ahmad, Governor, State Bank of Pakistan, in the presence of senior bankers and government officials. Mr Ahmad said the State Bank and the government had been working closely with the Pakistan Banks Association over the past few months to develop a self-sustaining and market-oriented remittance scheme that could continue to facilitate, encourage and attract workers' remittances from overseas Pakistanis through formal channels. He said workers' remittances were the backbone of millions of families across Pakistan, helping to meet household expenditures, support education and healthcare, and provide resources for investment and economic opportunity.
Briefing participants on the initiative, Mr Muneer Kamal, chief executive and secretary general of the Pakistan Banks Association, said qualifying remittances make beneficiaries automatically eligible for quarterly draws from January 2027, with a prize pool of Rs. 4 billion per quarter (Rs. 16 billion a year), funded by the banking industry, with governance mechanisms developed in consultation with the State Bank. This builds on the remitter incentive banks have funded since July 2026, previously borne by the federal government, now around Rs. 80 billion a year, bringing the industry's combined annual commitment to close to Rs. 100 billion, aligned with the government's remittance objectives.
The Governor also highlighted the substantial strengthening of the country's external account position. He noted that the external current account deficit, which had reached unsustainable levels in FY22 and caused a rapid depletion of foreign exchange reserves, had now been brought to manageable levels, supporting a sustained build-up in foreign exchange buffers. State Bank reserves, which fell below US$3.0 billion in February 2023, now stand at US$21.4 billion, he said, and unlike in the past the continued strengthening of buffers has been driven primarily by foreign exchange purchases from the market rather than an accumulation of external debt. He highlighted the exceptional performance of workers' remittances, which reached a record US$41.6 billion in FY26, compared with US$21.7 billion in FY19, nearly doubling over the period.
The launch is the latest in a series of coordinated steps by the State Bank, the government and the industry to support the external sector. Earlier this year, banks voluntarily cut the Export Refinance Facility markup by 3.0 points to 4.50% on new loans and rollovers, within the PKR 1,052 billion ERF limit, supporting the government's export-led growth agenda alongside the Export-Import Bank's financing for export SMEs. Private credit rose to PKR 1.46 trillion in FY26 (+35%), agricultural credit hit a record PKR 3.23 trillion (+24.7%), SME financing reached PKR 1.07 trillion, and housing finance crossed PKR 300 billion. The industry has committed to PKR 1.5 trillion each in agri/SME financing by June 2027, and PKR 2 trillion each by June 2028. Mr Zafar Masud, chairman of the Pakistan Banks Association, said banks had consistently stepped up, taking over the Rs. 80 billion remitter incentive, cutting export refinance rates, taking private, agricultural and SME lending to record levels and supporting circular debt resolution, adding that overseas Pakistanis were an equally important part of the story and that the Pasban Scheme recognised their contribution, in partnership with the State Bank and the government.
