KARACHI: In order to further strengthen the regulatory regime of exchange companies and promote banking channels, the State Bank of Pakistan (SBP) has restricted exchange companies for cash sale transactions worth $2,000 or more.

In accordance with the new SBP guidelines, ECs are now required to conduct all foreign currency sales transactions of $2,000 or more for PKR through banking channels.

The State Bank has informed exchange companies that all sales transactions of foreign currency of USD 2,000 or more (equivalent in other currencies) against PKR should only be made through payment methods, such as bank transfers/cheques from the customer’s personal bank account. aimed at further enhancing transparency and promoting documentation in foreign exchange transactions.

This approach also aims to encourage the general public to use different banking channels, which are generally more secure, to meet their real currency needs.

The SBP announced the modification of 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 Exchange Company Handbook for Exchange Companies and Class “B” Exchange Companies.

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In order to further streamline the regulatory regime of exchange companies and encourage customers to use banking channels for the purchase of currencies from exchange companies, the existing regulations prescribing the scope of business of exchange companies have been amended, which will take effect immediately, the SBP.

Pursuant to paragraph 9(i)(g) of Chapter 3 of the Exchange Companies Handbook, all foreign currency sales transactions of USD 2,000 or more or the equivalent in other currencies against PKR will be effected by exchange companies by bank transfer or staff check. customer’s account.

According to SBP, the transaction or instrument reference number and the name of the bank transferring the funds or issuing the instrument will be mentioned on the transaction receipt, issued by exchange companies, along with the document number customer identification.

In addition, pursuant to paragraph 9(iii)(g) of Chapter 3 of the Exchange Companies Handbook, all transactions involving the sale of foreign currency for an outgoing payment of USD 2,000 or more or the equivalent in other currencies against PKR will be made by the exchange companies via bank transfer/cheque from the client’s personal account. The exchange company will have to mention the transaction or instrument reference number and the name of the bank transferring the funds or issuing the instrument on the transaction receipt as well as the customer identification document number.

Similarly, pursuant to paragraph 12(i)(d) of Chapter 8 of the Exchange Companies Handbook, all foreign currency sale transactions of USD 2,000 or more or the equivalent in other currencies against PKR will be made by Class “B” exchange companies through a bank. transfer/check from the customer’s personal account.

“The transaction or instrument reference number and the name of the bank transferring the funds or issuing the instrument must be mentioned on the transaction receipt along with the customer identification document number,” it said. the SBP to class “B” exchange companies.

The SBP has warned exchange companies that failure to comply with these instructions will result in regulatory action under the relevant provisions of the Foreign Exchange Regulation Act 1947.

Malik Bostan, Chairman of the Forex Association of Pakistan, welcomed the decision of the SBP saying that the exchange companies will support all such initiatives to overcome the current cash crisis.

He said foreign exchange companies are already fully compliant with SBP guidelines, which will help further streamline foreign exchange trading through the banking channel.

He asked the SBP for strict control of online credit card transactions, which are increasing rapidly. “We have asked the SBP for strict checks and balances on online commerce through credit cards to control the outflow of the US dollar,” he added. Bostan said he is in contact with Federal Finance Minister Miftah Ismail and SBP officials to increase dollar inflows into the country.

Copyright Business Recorder, 2022