Banks await operating instructions on new worker remittance incentive

• CB discontinues Rs.8.00 contribution; tells banks govt. will clarify on new incentive in due course

By Indika Sakalasooriya 
While the government yesterday announced that it would increase the incentive given to migrant worker dollars, the Central Bank has informed banks that it would discontinue the Rs.8.00 incentive offered for such inflows effective from March 9, 2022, as greater flexibility in exchange rate is now allowed. 

The government yesterday said it would offer an incentive of Rs.38.00 for a migrant worker dollar, up from previously offered Rs.10, of which the Central Bank contributed Rs.8.00 and the government Rs.2.00.

The Central Bank on Monday devalued the rupee by about 15 percent. However, when the government yesterday announced the increase in incentive on migrant worker remittances to Rs.38.00 it wasn’t immediately clear whether it was to be added on top of the new exchange rate cap of Rs.230.00 or the previous cap of Rs.200.00.

Banks are also currently awaiting further instructions either from Central Bank or the government.

However, a letter sent to banks by the Central Bank Governor seen by Mirror Business said, “…new incentive to expatriate workers who convert remittances would be clarified by the government in due course.”

Meanwhile, the same letter stated that the requirement of the sale of 25 percent of converted worker remittances and the mandatorily converted export proceeds by banks to the Central Bank would continue.