Pakistani Expats May Return to Hundi as Remittance Subsidies End

As Pakistan grapples with economic woes, a significant chunk of its remittance income is at risk of being redirected back into informal channels. The recent decision by the State Bank of Pakistan to abolish two remittance schemes may have far-reaching consequences for the country's foreign exchange earnings and the economy as a whole.

Background & Context

Pakistani expats, who work tirelessly in countries like Saudi Arabia, the UAE, Qatar, Europe, the UK, and the US, have been the unsung heroes of the country's economy. They send a significant portion of their earnings back home every month to support their families and loved ones, often sacrificing their own comforts in the process.

Remittances have been a crucial lifeline for Pakistan's economy, with the country receiving a record $38.3 billion in remittances in 2025 alone. However, the recent decision to end the remittance subsidies may change the dynamics of this vital income stream.

Key Details

The two remittance schemes that have been abolished are the Telegraphic Transfer Charges Incentive Scheme and the Sohni Dharti Remittance Program. The former was a flagship initiative that provided subsidies to expats for transferring money to Pakistan, while the latter offered rewards to those who used official channels to remit funds.

The Sohni Dharti Remittance Program was designed to incentivize expats to use official channels by offering rewards and benefits. However, with the abolition of this program, it is unclear what alternatives are available to expats who wish to send money back home.

The State Bank of Pakistan has estimated that the abolition of these schemes will result in a saving of around $1.2 billion annually. However, this may not be entirely a positive development for the economy, as it may lead to a shift towards informal channels like hundi, which can be more expensive and riskier for both senders and receivers.

What Experts Say

According to experts, the abolition of remittance subsidies may have far-reaching consequences for the economy. "Remittances are a critical source of foreign exchange for Pakistan, and any disruption to this income stream can have significant implications for the economy," said Dr. Muhammad Ali, a leading economist.

Dr. Ali added that the decision to end remittance subsidies may lead to a shift towards informal channels like hundi, which can be more expensive and riskier for both senders and receivers. "This can have a negative impact on the economy, as it can lead to a loss of foreign exchange earnings and increased costs for senders," he said.

Key Takeaways

• The State Bank of Pakistan has abolished two remittance schemes, the Telegraphic Transfer Charges Incentive Scheme and the Sohni Dharti Remittance Program.
• The abolition of these schemes is expected to result in a saving of around $1.2 billion annually.
• The decision may lead to a shift towards informal channels like hundi, which can be more expensive and riskier for both senders and receivers.
• Remittances are a critical source of foreign exchange for Pakistan, and any disruption to this income stream can have significant implications for the economy.

What This Means For You

If you are a Pakistani expat who sends money back home every month, you may be affected by this decision. The abolition of remittance subsidies may lead to increased costs and reduced benefits for senders, which can have a negative impact on your finances.

However, this decision also presents an opportunity for the government to rethink its approach to remittances and explore new ways to incentivize expats to use official channels. By doing so, the government can ensure that remittances continue to flow into the country and support the economy.

As a Pakistani expat, it is essential to stay informed about the latest developments and to explore alternative channels for sending money back home. By doing so, you can ensure that your hard-earned money reaches your loved ones safely and efficiently.