SBP Clarifies There is No Change in How Banks Deal With Foreign Currencies - Android

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SBP Clarifies There is No Change in How Banks Deal With Foreign Currencies - Android

The State Bank of Pakistan (SBP) has issued a clarification that there was no change in instructions regarding the purchase Read More

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The State Bank of Pakistan (SBP) has issued a clarification that there was no change in instructions regarding the purchase of foreign currency notes by banks who were allowed to deal in international currencies through authorized branches.

Pakistan’s exchange companies will continue to play their role in the country’s economy.

The press release said that there are some confusions and misinterpretations regarding Para 2 suggesting that SBP has allowed the banks to sell or purchase foreign currencies to and from the public by amending the existing regulations, which is not the case.

In this regard, it is clarified that no such amendment has been made. It would be pertinent to mention here that even before the recent revision in Chapter 11, every authorized branch was permitted to deal in foreign currency notes, coins, deposits, credits, drafts, travellers cheques, letters of credit and bills of exchange, expressed or drawn in Pakistan currency but payable in any foreign currency.

A statement issued by the SBP stated that the foreign exchange policy and its operations in Pakistan are formulated and regulated in accordance with the provisions of Foreign Exchange Regulations Act, 1947 (FERA).

For the purpose of ensuring compliance with the provisions of the act, instructions to banks are issued in the form of notifications, circulars, and circular letters, the statement read, adding that these instructions are made part of the Foreign Exchange Manual.

The SBP clarification stated:

SBP is in process of revising the Foreign Exchange (FE) Manual in a phased manner. In this respect, seven chapters (1, 2, 3, 4, 5, 7 & 20) of FE Manual have been revised and circulated through FE Circular, dated November 29, 2018, in the first phase. In phase II, three chapters (8, 9 & 11) have been revised through FE Circular No. 03 of 2019, dated July 16, 2019,

It further noted that the revised chapter 11 includes regulations on ‘Dealings in Foreign Currency Notes and Coins, etc. by the Authorized Dealers (banks)’.

“Since Chapter 11 of the FE Manual specifically governs regulations regarding dealings in foreign currency notes and coins etc. by the authorized dealers, therefore, the instructions related to sale/purchase of foreign currency notes have been added in chapter 11 with emphasis on authorized dealers regarding compliance with AML/CFT regulations’, the statement further read.

The existing instructions issued by SBP, vide Notification No. F.E.1/2012-SB dated 16th June 2012, regarding currency declaration to the Customs authorities by the inbound travelers on an amount exceeding $10,000, or equivalent in other currencies, have also been incorporated in revised Chapter 11, the SBP concluded.

In an interview to an international news agency Malik Bostan, president of the Forex Association of Pakistan said that the currency dealers also play a vital role for the country’s economy “that cannot be downplayed.”

“Banks were already authorized to undertake foreign exchange currency business through authorized branches, but they did not take interest in currency dealing which is evident from the fact that only a few of them established such branches”, he added.

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23/07/2019 05:40 AM