(MENAFN - Khaleej Times) Money transfer to Pakistan could be costlier as the Foreign Exchange & Remittance Group (FERG) in the UAE is planning to start charging a fee on remittances to Pakistan in protest of their unsettled rebate amount.
"Millions of dirhams as a rebate remained unpaid since August 2011 by the Government of Pakistan," FERG claimed in a statement to Khaleej Times.
However, Pakistan Embassy in Abu Dhabi said they are not aware of the situation as nobody from the FERG contacted in this regard, but they are ready to help them.
"We've always helped them in the past and will take up their case with the SBP [State Bank of Pakistan] if they send us details of their claims," according to an Embassy official. The amount is around Dh60 million, which is unpaid for almost a year, according to a source in exchange business. Banks may charge Dh15 per transaction from customer, if Government of Pakistan fails to settle their unpaid rebate amount, the source added.
Exchange firms get Dh15 per transaction as a fee in the name of rebate as a sending agent, while the bank involved in delivering the money in Pakistan gets Dh10.
This scheme was introduced to encourage expatriate workers to use banking channels in order to discourage hundi/hawala transfers, which was popular at that time in the absence of modern banking facilities in remote areas.
Following the introduction of the rebate system, remittances from UAE through official banking channels surged and were estimated to be around 3 billion in 2011.
Pakistan's central bank processes the claims within two weeks of their submission and since, many companies file fake claims also, it takes little longer in auditing them, according to an Abu Dhabi-based banker. He said many exchanges have been involved in splitting a transaction into many smaller ones for charging more fees. So instead of Dh15 fee for one transaction of Dh10,000 they will split it into 10 transactions to claim Dh150.
Exchange companies in UAE have now made it clear that if outstanding rebates are not received immediately, they would be constrained to charge service fees on all remittances to Pakistan. They have further clarified that this would grossly affect the remittances routed through official banking channels as it could push customers back to unofficial channels.
With the banking network extended to remote cities and towns bringing online banking and IBAN, money transfers have become hassle free in Pakistan. In some cases, where a third bank is involved in the transaction's execution, it may take a maximum of three days. Otherwise, in most cases money can be withdrawn next day, even in remote areas of Pakistan.
