How the latest SBP policy change affects remittance costs, banks and families back home.
Dubai: Will it cost more for Pakistanis in the UAE to send money home this month? That is the question many are asking after the State Bank of Pakistan (SBP) decided to discontinue two incentive schemes that supported banks and remittance service providers.
The move has raised concerns about whether transfer fees could increase for overseas Pakistanis, even as remittances remain a vital source of income for millions of families back home.
The policy change, which came into effect on July 1, ends government-funded reimbursements previously paid to banks and other participating institutions for processing eligible overseas remittance transactions. However, it does not alter the customer-facing benefits that most overseas Pakistanis rely on when sending money through formal channels.
“We do not expect the State Bank of Pakistan’s decision to have a material impact on Al Ansari Exchange’s operations or on the wider remittance market in the UAE,” said Ali Al Najjar, CEO of Al Ansari Exchange.
“Pakistan remains one of our largest remittance corridors, and the policy appears to relate to incentive arrangements within Pakistan’s banking system rather than the underlying demand for cross-border transfers or the remittance infrastructure,” Al Najjar said.
What changed?
According to separate State Bank of Pakistan (SBP) circulars issued on July 2, the Sohni Dharti Remittance Programme (SDRP) and the Telegraphic Transfer Charges Incentive Scheme (TTCIS) were discontinued with effect from July 1, 2026.
Under the TTCIS, participating banks, exchange companies and authorised dealers were reimbursed by the State Bank of Pakistan for eligible telegraphic transfer charges. The arrangement allowed qualifying remittance transactions to remain free for both senders and recipients.
With the scheme now discontinued, those reimbursements have ended. However, the SBP has instructed participating institutions to continue implementing the scheme “at their end while preserving its key features”, adding that eligible home remittance transactions must continue to remain free of charge for both senders and beneficiaries.
In a separate circular, the central bank also discontinued the Sohni Dharti Remittance Programme (SDRP), which rewarded overseas Pakistanis for using formal remittance channels.
Will you pay more?
Based on the State Bank of Pakistan’s circulars, the short answer is no. The central bank has instructed participating institutions to continue offering eligible remittance services free of charge for both senders and beneficiaries, despite the end of the reimbursement scheme.
Al Najjar said Al Ansari Exchange does not expect the policy change to affect customers.
“We do not currently anticipate any impact on customers’ remittance costs,” he said.
“Reports suggest that eligible home remittance transactions in Pakistan are expected to remain free of charge for both senders and beneficiaries.”
Why were the schemes discontinued?
The SBP has not provided a detailed explanation for discontinuing the two programmes.
According to Pakistan’s Dawn newspaper, banking sector sources said the cost of maintaining the incentive schemes had risen sharply as remittance inflows reached record levels in recent years.
Dawn also reported that the growing fiscal burden came under scrutiny during discussions with the International Monetary Fund (IMF), which questioned the continued incentive payments as remittance volumes increased.
While the latest policy ends the reimbursement mechanism for participating banks and remittance providers, it does not change the zero-fee arrangement for customers making eligible remittance transfers through formal channels.
Banks raise concerns
Pakistan’s banking industry has voiced concerns that participating institutions will now have to absorb costs previously reimbursed by the State Bank of Pakistan.
Speaking at a press conference, Pakistan Banks Association (PBA) Chairman and Bank of Punjab CEO Zafar Masud said banks are consulting on how to finance remittance inflows following the policy change.
Bank Alfalah CEO Atif Bajwa said the SBP’s decision would weigh on banks’ profitability, as institutions will now bear costs that were previously covered under the incentive scheme.
Despite these concerns, the PBA has said banks remain committed to supporting remittance inflows and will continue working to facilitate overseas transfers.
Limited impact expected
Banking experts quoted by Dawn said the withdrawal of the TTCIS is unlikely to have a significant impact on either the banking sector or remittance inflows.
According to the newspaper, some experts argued that the scheme, introduced in the early 1980s, had outlived its purpose as advances in digital banking have significantly reduced the cost of processing international money transfers.
They also pointed out that Pakistan’s banking sector remains one of the country’s most profitable industries. Banks earned about Rs640 billion in calendar year 2025, with profitability rising further during the first quarter of 2026.
The experts also noted that incentives available under the Pakistan Remittance Initiative (PRI) remain unchanged. Under the programme, banks will continue to receive incentives based on the volume of remittances they process.
The SBP has also introduced a transition period for overseas Pakistanis who accumulated reward points under the Sohni Dharti Remittance Programme (SDRP).
Reward points earned on eligible remittances processed up to June 30, 2026, can be redeemed until June 30, 2027, after which the programme will be formally closed.
Will remittance growth slow?
The SBP does not expect the discontinuation of the two schemes to derail the country’s remittance growth.
State Bank Governor Jameel Ahmad has said workers’ remittances are expected to continue growing in FY2027 despite the discontinuation of the incentive programmes.
Al Najjar said he also expects overseas Pakistanis to continue using established remittance channels.
“We anticipate overseas Pakistanis will continue sending money home to support their families and meet regular financial commitments, with established channels, including our digital platforms, remaining available for them to do so,” he said.
The Pakistan Banks Association has likewise reaffirmed its commitment to supporting remittance inflows, saying member banks will continue working to increase transfers through formal channels.
Remittances remain vital
Workers’ remittances remain one of Pakistan’s largest sources of foreign exchange, playing a crucial role in supporting household incomes, strengthening foreign exchange reserves and improving the country’s external account.
Pakistan received about $40 billion in workers’ remittances during FY2025, according to figures cited by Dawn. Banking experts quoted by the newspaper expect inflows to reach between $41 billion and $42 billion in FY2026, supported by continued labour migration—particularly to Gulf countries—and sustained use of formal remittance channels.
For Pakistani expatriates in the UAE, the latest policy change primarily affects how participating banks and remittance providers are compensated for processing transfers, rather than how customers send money home. Eligible remittance transactions are expected to remain free of charge under the SBP’s current guidance.
Based on the SBP’s directives and comments from remittance providers, eligible transfers are expected to continue through formal banking and exchange company channels without transfer charges, even as participating banks and financial institutions adjust to operating without the discontinued reimbursement schemes.
