The government has announced a thorough review of the Pakistan Remittance Initiative (PRI), the flagship programme aimed at routing remittances from overseas Pakistanis through formal banking channels.

The decision follows observations that while remittances have nearly doubled over the past decade, payments under the scheme have soared more than fourfold.

At a meeting of the Senate Standing Committee on Finance and Revenue, Additional Secretary Finance Amjad Mehmood informed lawmakers that the Ministry of Finance had recommended the review to the Economic Coordination Committee (ECC), which approved the proposal.

The Cabinet has also instructed that a thorough evaluation be carried out.

During the session, chaired by Committee Chairman Saleem Mandviwalla, State Bank Deputy Governor Dr. Inayat Hussain presented a detailed briefing on policy changes, applicable rates, and their financial impact over time.

Mandviwalla stressed that the review had become unavoidable, highlighting that annual remittances have increased from $19 billion to over $36 billion in the last ten years, while disbursements under the scheme have escalated from Rs20 billion to Rs130 billion.

The State Bank Deputy Governor noted that the scheme has played a vital role in bringing remittances into the formal financial system. Under recent changes, the per-transaction eligible amount has been raised from $100 to $200 to encourage greater use of official channels.

Committee members were informed that the PRI has been active since 2009, aiming to discourage informal methods like hundi and hawala. Initially involving 25 financial institutions, the network has expanded to over 50, including conventional and Islamic banks, microfinance institutions, and exchange companies. Electronic Money Institutions (EMIs) have also been permitted to participate.

The number of international institutions linked to the scheme has risen sharply, from 45 in 2009 to more than 400 by 2024, with 33 new foreign partners joining in the last fiscal year alone.

According to the State Bank, remittances grew from $7.8 billion in 2009 to $30.3 billion by FY2024, marking a 65% increase and reflecting their critical role in Pakistan’s economy.

The meeting also addressed delays in implementing local currency settlement mechanisms. Chairman Mandviwalla pointed out that while commercial banks issue Visa and Mastercard debit cards generating $300 million in annual outflows they do not give consumers the option of using the domestic payment network, PayPak.

The committee proposed making it mandatory for banks to offer PayPak as an option when issuing debit cards.

Officials shared that, as of March 2025, out of 53 million debit and credit cards issued in Pakistan, only 10 million are PayPak and 2.5 million are co-badged, with the majority remaining Visa and Mastercard.

In a written submission, the State Bank noted that Visa, Mastercard, and UnionPay operate extensive global payment networks, enabling transactions online and at merchants worldwide. However, the central bank has launched various initiatives to reduce reliance on these networks and promote low-cost, rupee-based alternatives.

Efforts are also underway to expand co-badging arrangements, allowing local cards to be used for international and e-commerce transactions. While commercial agreements between banks and payment networks dictate pricing, the State Bank said it is promoting competition through regulatory oversight to help lower digital payment costs.

Despite these efforts, international networks continue to dominate due to their strong global reputation, established trust, wide acceptance, financial incentives to banks, and exclusive consumer benefits.