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$2,000 and above: ECs must conduct sales transactions through banking channels: SBPMEERI News

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KARACHI: In order to further strengthen the regulatory regime for exchange companies and promote banking channels, the State Bank of Pakistan (SBP) has banned cash sale transactions of $2000 and above to exchange companies.

According to the new SBP directive, ECs are now required to conduct all foreign exchange sales transactions of $2,000 or more against PKR through banking channels.

The State Bank has advised exchange companies that all foreign exchange sales transactions against PKR of $2,000/- or more (equivalent to other currencies) should be made only through payment methods, such as the customer’s personal bank account. Bank Transfer/Cheque from The objective is to further enhance transparency and encourage documentation in foreign exchange transactions.

The move is also focused on encouraging the general public to use various banking channels, which are generally more secure, to meet their genuine foreign exchange needs.

SBP has announced to amend 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 Companies Manual for ‘B’ category exchange companies and exchange companies.

‘Serious violation’: SBP suspends license of two currency exchange companies for 3 months

In order to further streamline the regulatory regime for exchange companies, and to encourage customers to use banking channels to purchase foreign currency from exchange companies, the existing rules determining the scope of business of exchange companies have been amended, which Effective immediately, the SBP

As per paragraph 9(i)(g) Chapter 3 of the Exchange Companies Manual, now all foreign exchange sales transactions of USD 2,000 or more or equal to or equal to USD 2,000 against PKR shall be made by the exchange companies through bank transfer or check from personal. will go Customer accounts.

According to SBP, the transaction receipt issued by the exchange companies, along with the customer’s identity document number, will mention the transaction or instrument reference number and the name of the bank transferring the funds or issuing the instrument.

Further, under paragraph 9(iii)(g) Chapter 3 of the Exchange Companies Manual, all foreign exchange sales transactions for outward remittances of USD 2,000 or more or the equivalent of other currencies against PKR are banked by exchange companies. Will be conducted by transfer/ check from customer’s personal account. The exchange company shall enter the transaction or instrument reference number and the name of the bank transferring the funds or the bank issuing the instrument on the transaction receipt along with the customer’s identification document number.

Similarly, as per paragraph 12(i)(d) Chapter 8 of the Exchange Companies Manual, all foreign exchange sales transactions of USD 2,000 or more or equal to or equal to USD 2,000 against PKR by banks through ‘B’ category exchange companies. will be conducted by Transfer/cheque from customer’s personal account.

The SBP has instructed “B” category exchange companies to “mention the transaction or instrument reference number and the name of the bank, which is transferring the funds or issuing the instrument, on the customer’s identification document on the transaction receipt. should be done with no.

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

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

He said that the exchange companies are already fully complying with the SBP directives and this will help in further smoothing the currency business through the banking channel.

He urged the SBP to strictly monitor online transactions through credit cards, which are increasing rapidly. “We have asked the SBP to put in place strict checks and balances on online trading through credit cards to control the flow of US dollars,” he added. Boston said they are in touch with Finance Minister Miftah Ismail and SBP officials to increase the flow of dollars into the country.

Copyright Business Recorder, 2022

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