KARACHI, Nov 20: Home remittances or the foreign exchange sent back home by overseas Pakistanis rose to about $450 million in the first four months of this fiscal year from $311 million in a year-ago period.

The State Bank said here on Tuesday that in October alone the banking system received $185 million worth of remittances up from $81 million in October last year.

A press release issued by the SBP said that total remittances including cash flows and encashment of FEBCs/FCBCs; haj remittances; and remittances from Iraq-Kuwait war victims rose to $529 million during July-October 2001 from $453 million in a year-ago period. FEBCs and FCBCs stand for foreign exchange bearer certificates and foreign currency bearer certificates respectively.

Senior bankers say home remittances shot up in October mainly due to a dramatic fall of the US dollar in the inter-bank and kerb market that levelled the difference between the two exchange rates. This left little charm for those who used to send foreign exchange through money changers to get a better exchange rate.

Bankers say more than 3.5 million overseas Pakistanis send $7-8 billion every year back home of which only $1 billion comes through the banking system and the rest through money changers — or hundiwalas.

Bankers say since the spread between the inter-bank and open market exchange rate is still below Re1 per dollar chances are that home remittances would continue to grow in the coming months. For Pakistan remittances by overseas Pakistanis are the second largest source of foreign exchange earning after exports. So any significant increase in the remittances would lessen the need for external financing by the international financial institutions.

Senior bankers say the narrowing down of the spread between the inter-bank and kerb exchange rates from more than Rs2 per dollar before September 11 to less than Re1 has led many banks to launch a campaign for attracting more of home remittances.

The central bank also is trying to cash in on it. The SBP Governor Dr Ishrat Husain visited the United Arab Emirates only last week and met heads of all Pakistani banks operating there.

In these meetings he emphasized that this had provided an ideal opportunity for the banks to bring in their fold the overseas Pakistani workers who may be using hundi channels to remit foreign exchange back home. Bankers say Dr Husain also met the governor of the central bank of the UAE Sultan Bin Nasser Al Suwaidi.