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KARACHI: In order to further strengthen the regulatory regime for exchange companies and facilitate banking channels, the State Bank of Pakistan (SBP) has restricted exchange companies for cash sale transactions of USD 2,000 and above.
As per the new SBP directives, ECs are now required to conduct all foreign exchange sales of USD 2000 or above in PKR through banking channels.
The State Bank has informed the Exchange Companies that all foreign currency sales of USD 2000 or above (equivalent in other currencies) against PKR should only be made through payment methods such as bank transfer/cheques from the customer’s personal bank account. aimed at further increasing transparency and promotion of documentation in currency transactions.
The move is also aimed at encouraging the general public to use various banking channels, which are generally more secure, to meet their genuine foreign exchange needs.
SBP has announced amendments to the instructions contained in paragraph 9 (i)(g) and paragraph 9 (iii)(g) of Chapter 3; and paragraph 12(i)(d) of Chapter 8 of the Listed Companies Manual for Listed Companies and Category “B” Listed Companies.
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In order to further simplify the regulatory regime for Exchange Companies and encourage customers to use banking channels to purchase foreign currency from Exchange Companies, the existing provisions defining the scope of activities of Exchange Companies have been amended by the SBP, which will take effect immediately.
Pursuant to Clause 9(i)(g) of Chapter 3 of the Manual for Exchange Companies, all foreign currency sales of USD 2,000 or above or the equivalent in other currencies against PKR will now be settled by Exchange Companies by bank transfer or check from a personal account the customer
As per SBP, the reference number of the transaction or instrument and the name of the remitting or issuing bank will be mentioned in the transaction receipt issued by the exchange companies along with the customer ID number.
In addition, as per paragraph 9(iii)(g) of Chapter 3 of the Exchange Companies Manual, all foreign currency sales transactions for outgoing remittances of USD 2000 or above or the equivalent in other currencies against PKR will be made by exchange companies by bank transfer/ check from the customer’s personal account. The exchange company will be required to include the transaction or instrument reference number and the name of the remitting or issuing bank on the transaction receipt together with the customer ID number.
Similarly, in accordance with Clause 12(i)(d) of Chapter 8 of the Manual for Exchange Companies, all sales of foreign currency of USD 2000 or above or the equivalent in other currencies against PKR will be carried out by Category “B” Exchange Companies through Bank Transfer / check from the customer’s personal account.
“The registration number of the transaction or instrument and the name of the bank that transfers the funds or issues the instrument must be indicated in the transaction receipt together with the number of the client’s identification document,” the SBP ordered the Exchange companies of category “B”.
The SBP has warned stock companies that failure to comply with these instructions will attract regulatory action under the relevant provisions of the Foreign Exchange Regulation Act, 1947.
Malik Bostan, Chairman, Pakistan Forex Association, welcomed the SBP’s move, saying that exchange companies would support all such initiatives to overcome the current cash crunch.
He said that the exchange companies are already fully compliant with the SBP directives and this will further streamline the foreign exchange business through the banking channel.
He appealed to the SBP to strictly monitor online credit card transactions, the number of which is increasing rapidly. “We have requested the SBP for strict checks and balances on online trade through credit cards to control the outflow of US dollars,” he added. Bostan said he is in touch with Federal Finance Minister Miftah Ismail and SBP officials to increase the inflow of dollars into the country.
Copyright Business Recorder, 2022