Remittances refer to sending money to remove an obligation or make a payment. There are different types including inland, foreign, inward, and outward remittances. Common modes of remittances are drafts, mail transfers, telegraphic transfers, SWIFT transfers, and electronic fund transfers. Banks must follow proper procedures to facilitate domestic and international remittances securely and in accordance with regulations.

1. Remittances
The process of sending money to remove an obligation.
Types of remittances:
1. Inland
2. Foreign
3. Inward
4. Outward

2. Remittance continue…
To effect remittance customer will submit required remittance form.
The customer account will be debited to the customer will deposit the
required amount plus bank charges to effect remittance.
Remittances are accepted for those places where the bank has its own
branches or for those other banks with whom the issuing bank has
agreements in term of remittance.

3. Remittance continue…
 Remittance should clearly state
1. The place of drawing.
2. Name of payee.
3. Payee’s account number.
 The issuing band should
1. Inform promptly the drawee branch about instrument/drawing.
2. Provide necessary safeguard to the instrument for example
writing amount through protectographic machine in the face of
instrument.
3. Utilization of quickest channel.

4. Foreign remittances:
 Foreign remittance means a payment made to a person in foreign country.
 Foreign remittances are required to be approved by the exchange control
department of SBP.
 There are some dealers authorized by SBP who can sanction foreign
remittances for specific purposes and for specific amouts.
 Remittances that do not fall under the authority of dealers then they must
be approved by foreign exchange control department.
 The usual types of remittances and the chapter of foreign exchange
control manual pertaining to them are as follows.
i) Travel Allocation chapter 18
ii) Private Remittances chapter 17

5. How Pakistani Banks facilitate payments abroad?
 Pakistani Banks maintain account with Banks in the principle financial
centers of the world.
 Deciding on which correspondent the drawing will be made based on the
reference to the list of correspondents and their agency agreements.
 If bank does not account in the country to which the payment is sent the
reimbursement to the drawee bank is provided according to the terms of
agency agreement.

6. Remittances in currencies not quoted by the banks in Pakistan
 Normally remittances are affected for those currencies the rates for which
are quoted by banks.
 In case of other currencies provisional deposit sufficient to cover the
expected cost is obtained and held in sundry deposit accounts.

7. Different modes of remittances
Modes of remittances are instruments used to send money.
They are;
1. Draft
2. Mail transfer (MT)
3. Telegraphic transfer (TT)
4. SWIFT
5. Electronic fund transfer.

8. Drafts
Draft is a mean of payment.
In issuing a draft, a bank issue a check on its own branch or on a
correspondent to settle a payment.
The payer will hand over that check (draft) to the payee.
The payee will present the check in the drawing bank for collection of
fund.

9. Disadvantages
The remitter account is debited at the time of issuance of draft while its
payment may take time.
Inconvenience associated with draft when it is lost. It take much time to
issue a duplicate draft.

10. Payment of draft before receipt of advice
The drawee bank should be careful in making payment to the presenter
of draft before receiving relative instruction from issuing bank.
In case of payment before receipt of advice, the payments will be made
by the authority of very senior officer of the bank and he will must be
satisfied by the identity and respectability of the presenter and by the
genuineness of the signatures.

11. Mail transfer
Bank-to-bank transfer of funds.
Such instrument are sent by mail and it take few days to reach its
destination.
MT advice include;
1) Full name of Beneficiary.
2) Beneficiary’s postal address.
3) Name of remitter.
If the bank issuing MT has no account with the drawee bank
reimbursement will be provided as per term of the agency
arrangements.

12. Mail transfer continue…
Mt advice should also indicate that payments are remitted through
such and such banks.
Mail transfer that are received should be entered into mail transfer
register after the signatures are verified by authorized officer.
On receipt of MT the beneficiary account will be credited or a
payment order will be issued in name of beneficiary.

13. Telegraphic transfer
Telegraphic transfer refers to transferring funds overseas through cable
message.
Coded message is thoroughly checked before dispatching the telegrams.
Telegrams should be decoded carefully and foreign currency amounts
should be recorded in foreign telegraphic transfer payable register
authenticated by officials with full signatures.
Beneficiary account will be credited or payment order should be issued
in favor of payee.

14. SWIFT
Acronym for “Society for worldwide interbank financial
telecommunication”.
It is a network that enables financial institutions worldwide to send and
receive information about financial transaction in a secure, standardized
and reliable environment.
It is mean of remittances, bank transfer and ever documentary credit.
Easy to reconcile.
Speed, efficiency, accuracy and security.

15. Electronic fund transfer
Transfer of funds through computer-based system, for example
withdrawals from ATM machine.
Electronic fund transfer Act defines, "the term electronic fund transfer
means any transfer of funds other than a transaction originated by a
check, draft or similar instrument.
Automated exchange messages.

16. Inward remittances
Inward remittance means purchase of foreign exchange in whatever form
and including MT, TT, draft, travelers checks, drafts under travelers letters of
credit, bills of exchang4e, currency notes and coins and debit to banks non-
resident rupee account.

17. Outward remittances
Outward remittance means sale of foreign exchange in any form including
TT, MT, drafts, travelers checks, travelers letter of credit, foreign currency
notes and coins and credit to bank’s non-resident rupee accounts.

18. Recommendations regarding Modes of remittances
Exchange control manual recommends that where remittances can be
effected by MT and TT the issuance of draft should be avoided.
If it is inconvenient for customer then demand draft crossed “payess
account only” may be issued.
Advice of draft should be promptly dispatched.
In case of payment of large amount a cable message should be sent to
the issuing branch if the draft advice is still not received.

19. Cancelation of outward remittances
In case of cancelation the outward remittance is reported as inward
remittance. The return in which the reversal is reported should be
supported by the letter giving the following particulars.
a. The date of the return in which the outward remittance was
reported.
b. The name and address of the applicant.
c. The amount of the sale as effected originally.
d. The amount cancelled.
e. Reasons for cancelation.

20. Cancelation of inward remittances
In this case authorized dealers must report the cancelation of inward
remittance as an outward remittance on form ‘M’. The return in which
the reversal of transaction is reported should be supported by a letter
giving the following particulars.
a. The date of return in which the inward remittance was reported.
b. The name and address of the beneficiary.
c. The amount of the purchase as effected originally.
d. The amount cancelled.
e. Reason for cancelation.