SBP Ends Remittance Fee Reimbursement Scheme, Leaving Banks to Absorb Transfer Costs

What the SBP changed on remittance charges

The State Bank of Pakistan has discontinued the Telegraphic Transfer Charges Incentive Scheme, or TTCIS, with effect from July 1, 2026. Under this scheme, banks that waived telegraphic transfer charges on eligible home remittances, the money overseas Pakistanis send back home, were reimbursed by the state for doing so. Withdrawing the scheme ends that reimbursement.

The catch for banks is that the service is expected to stay free for senders and receivers. The SBP circular said authorised dealers should continue the scheme's key features at their own end. With the reimbursement gone but the fee-free service continuing, banks are now expected to absorb the cost themselves.

Why it matters for bank stocks

Remittances are a big deal for Pakistan's banks. They bring in low-cost foreign currency, feed current and savings deposits, and generate related fee and foreign-exchange income. The banks that mobilise the most remittances built large operations to capture that flow, helped by the reimbursement that covered the cost of offering free transfers.

Taking away that reimbursement turns a covered cost into an absorbed one. It is a negative at the margin for the banks most active in remittances, since they now carry the transfer-processing expense without the state offsetting it. The effect is small next to a large bank's overall earnings, so this is a modest headwind rather than a major hit.

Which stocks, and why

The banks with the largest home-remittance franchises are the most exposed. Habib Bank is the biggest mobiliser of home remittances in the country, so it carries the most of this cost. United Bank, Meezan Bank, and National Bank of Pakistan also run sizeable remittance operations and face the same absorbed cost. The impact on each is a small negative, not a change to the core earnings engine of net interest income. Banks with limited remittance activity are barely touched, which is why we do not spread this across the whole sector.

What to watch

Watch whether the banks introduce any new arrangement or pass part of the cost on, since the circular leaves room for an alternative to emerge. Look for any mention of remittance-related costs or fee income in the next set of bank results. The bigger driver for bank earnings remains the policy rate and deposit growth, so keep this in proportion against those.