Pakistani Banks to Spend Rs. 100 Billion of Their Own Funds to Boost Remittances

Commercial banks in Pakistan plan to spend Rs. 100 billion from their own resources during fiscal year 2026-27 to make sending money to Pakistan cheaper and encourage overseas workers to use formal banking channels, according to the Pakistan Banks Association (PBA). PBA Chairman Zafar Masud shared the plan at a media meetup at the Karachi Press Club, explaining that banks decided to fund the effort themselves after the government stopped providing subsidies for remittance transactions.

Masud said overseas Pakistanis currently pay between 18 and 20 riyals to send every $200 home. Banks will now absorb that cost from their profits, lowering the price of formal transfers and giving senders a stronger reason to avoid informal routes. A further Rs. 16 billion has been set aside for the Pasban Remittance Reward Scheme, which rewards families in Pakistan when money arrives through official channels.

PBA Chief Executive Officer Munir Kamal said the scheme is designed to help keep annual remittance inflows at around $41 billion. The first balloting under the reward program is scheduled for January, and an audit will be carried out to ensure the process is transparent. Remittances are a key source of foreign exchange for Pakistan, so even a modest shift toward official channels can matter for the country's external accounts.

Beyond remittances, Masud outlined a broader expansion of bank financing. The number of people benefiting from housing finance has risen to more than 350,000 from 65,000, while the housing loan portfolio has grown to Rs. 455 billion from Rs. 200 billion over the past two years. Banks have also held a 4 percent refinancing rate for exporters despite higher prevailing interest rates, providing close to Rs. 100 billion in subsidies from their own funds.

In the energy sector, banks are restructuring Rs. 1.3 trillion of debt over the next two years to help tackle circular debt, a process expected to cut electricity bills by nearly Rs. 3 per unit once complete. Masud said banks have also committed to raising annual agricultural financing from Rs. 1.3 trillion to Rs. 3.3 trillion, while Kamal noted that lending to small and medium-sized enterprises has climbed to Rs. 1.2 trillion from Rs. 490 billion in a couple of years.

Masud also called for reducing cash transactions and widening digital payment options, including QR codes, to shrink the undocumented economy. The remarks position the banking sector as a larger source of subsidised credit and digital infrastructure at a time when public finances remain tight.