The decision, which will come into effect from Wednesday, is expected to prevent migrant workers from economic exploitation.

The Department of Foreign Employment (DoFE) said that the directive was aimed at promoting ethical and transparent recruitment practice. In a public notice, the department has warned that agencies found guilty of non-compliance will be penalised according to the law.

The new decision has also made it compulsory for foreign employment agencies to pay commission to their overseas partners through banks. Recruiting agencies usually take their fees upfront, while hundi and other informal channel are used to pay commissions to local agencies in work destinations.

DoFE officials said that the office will not issue pre-work approval unless the parties submit proof of payment through banking channel.

“The department has found that recruiting agencies have been taking exorbitant changers from workers. The new move will discourage such unethical practices,” said Badri Karki, spokesperson of DoFE.

The government has set Rs 80,000 as maximum recruitment cost for Malaysia and Rs 70,000 for Gulf countries, but recruitment companies have been charging much higher rates. Stating that many recruiting agencies are charging higher fee even for free visas and tickets, DoFE has also warned of action against such agencies.

“The Foreign Employment Act clearly bars the recruiting companies from charging workers when the employer himself is incurring the visa fee. Those charging fee for free visas and tickets will face strict action,” reads a statement issued on Tuesday.

The International Affairs and Labour Committee of the Parliament on November had asked the government to bring all transaction of foreign recruitment agencies under proper banking channel. The committee has also launched investigation into financial irregularities prevalent in the foreign employment sector.