Digital challenger bank planned to deter hundi, hawala

ISLAMABAD: The incumbent government is planning to introduce 'digital challenger bank' to incentivise overseas Pakistanis to use formal legal channels to send their money to their families and relatives in Pakistan, an official said on Saturday.

“The concerned ministry has briefed the finance minister on the project, which is likely to be presented before Prime Minister for final approval,” Syed Zulfiqar Hussain Bukhari, Special Assistant to Prime Minister on Overseas Pakistanis and Human Resource Development, said while talking to state media.

“The initiative was aimed at making banking channels cost-effective and hassle-free for Pakistani expatriates and to discourage the illegal means of transferring money like the hundi system, being the main impediment in the growth of Gross Domestic Product (GDP).”

Bukhari said the country's first ever digital national remittance bank would be established in head office of National Bank of Pakistan (NBP) and would start its operations as soon as possible.

“We are focusing on automation to ensure swift service delivery by creating user-friendly banking environment for expatriates, who are enduring tough working schedules overseas,” Bukhari said.

He claimed every year overseas Pakistanis sent over $20 billion through proper channel, while over $10 to 15 billion was making its way via informal means in the country. “We are working closely with State Bank of Pakistan and the NBP to materialise the initiative for increased use of banking channels to give a boost to the country's foreign reserves,” Bukhari said.

He said remittances sent through normal banking channels were a vital source of balance of payments support for the country, while funds transmitted through hundi, hawala or other informal means were detrimental to this much-needed support.

Bukhari said they had introduced biometric verification system to ensure the better communication between the Ministry and the Pakistani diaspora working abroad.

He said they would link the facilities, being provided to their families like housing and schooling, with use of legal channels for their remittances.

Highlighting the measures taken by the ministry to enhance the current amount of remittances, Pervaiz Ahmed Janjua, Secretary Overseas Pakistanis, said currently some 19 Community Welfare Attaches (CWAs), working in different countries, had been directed to sensitise the Pakistani diaspora about using the legal banking channels for transfer of their money to uplift the national economy.

“In view of decreasing precious foreign reserves, the CWAs would appeal the Pakistani expatriates to send more remittances to steer the country out of economic crisis,” he said adding they were mulling to relocate the CWAs to those countries where number of the overseas Pakistanis was much in density.

"Currently, there are 1,25,000 overseas Pakistanis that have Foreign Exchange Remittances Card for which Overseas Pakistan Foundation (OPF) has been directed to increase its number, which eventually help curb the Hundi practice by providing various facilities to expatriates through this card,” he claimed.

The ministry’s statement said Pakistan Tahreek-e-Insaf-led government under the Prime Minister Imran Khan was eager to provide special treatment to Pakistani diaspora, working abroad and sought their positive response for addressing the country’s economic challenges.

“Considering them the country’s economic bridge, the PM had also conducted several meetings over incentivising Pakistani expatriates,” the statement said.

In the first five months of FY19, remittances from overseas Pakistani workers increased 12.56 percent to S$9.02 billion compared to $8.02 billion in the corresponding period last year.