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KARACHI: In order to promote documentation and transparency in the foreign exchange transactions, the State Bank of Pakistan (SBP) has made it mandatory that Pakistan Rupee consideration of currency exchange (CE) transactions between Exchange Companies (ECs), Exchange Companies “B” category and franchises of Exchange Companies will be conducted through the bank accounts.

The State Bank on Friday has announced to amend amended foreign exchange regulations’ Paras 9 (i)(b) of Chapter 3 and Para 12 (i)(a) of Chapter 8 of Exchange Companies Manual, in terms of which, they are allowed to purchase/ sale foreign currencies from each other, as per their scope of business.

In terms of revised regulations, it has been made mandatory for Exchange Companies, Franchises of Exchange Companies and Exchange Companies of ‘B’ Category to settle Pakistan Rupee consideration of all foreign currency purchase/ sale transactions conducted among themselves through their bank accounts.

“Pakistan Rupee consideration of currency exchange transactions amongst ECs, ECs-B and franchises of ECs will be conducted through the bank accounts of respective ECs, ECs-B and franchises of ECs”, a circular issued by SBP said.

Besides, stress has been laid on ensuring that CCTV Systems of Exchange Companies and Exchange Companies of ‘B’ Category should be functional at all times (i.e., 24 hours a day and 7 days a week) as required under existing regulations.

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However, in order to ensure transparency, it has been advised that Exchange Companies and Exchange Companies of ‘B’ Category shall not carry out any business activity during the period in which CCTV system is non-functional at any of their outlet for any reason, including technical faults, until the functionality of the CCTV system is restored.

Moreover, minimum preservation period of video recording through CCTV system has been enhanced from two to six months or until the inspection of the company by SBP, whichever is earlier. This would ensure availability of CCTV recording for audit/ inspection purposes.

Accordingly, the relevant Paras of Exchange Companies Manual would stand amended as under:

Para 9(i)(b):

Purchase and sale of foreign exchange in “Ready”, “Tom” and “Spot” value dates from/ to other Exchange Companies. Further, Exchange Companies, including their Franchises, shall settle Pakistan Rupee consideration of all foreign currency purchase/ sale transactions conducted with other Exchange Companies, Franchises of Exchange Companies, and Exchange Companies of ‘B’ Category only through their bank accounts.

Para 12(i)(a)

Exchange Companies of ‘B’ Category are authorized to deal in purchase and sale of foreign currency notes and coins from individuals, Exchange Companies and Exchange Companies of ‘B’ category in ‘Ready’ value only. Further, Exchange Companies of “B” Category shall settle Pakistan Rupee consideration of all foreign currency purchase/ sale transactions conducted with other Exchange Companies, franchises of Exchange Companies and Exchange Companies of “B” Category only through their bank accounts.

Copyright Business Recorder, 2022

Comments

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Osama Malik Oct 01, 2022 08:49am
By making the operation of exchange companies a painful hassle, the SBP has stupidly ensured that the cash FX business will totally move into unregulated hands in the near future. Ironically, the opposite of their stated intentions will now come true: less documentation and less transparency. This is not idle speculation. If the mummies at the SBP could see beyond their noses, they would know about similar markets in Argentina, Lebanon, Nigeria, etc. They seem not to understand that exchange companies work only if ready cash is available. Turning their capital into bank credits from cash is parallel to forcing the use of sand when cement is required.
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Owais Oct 01, 2022 01:44pm
A very good step towards documentation. People living outside must transfer money through bank channels. People living inside country buy n sale forigen currency through bank channels. Peoples carrying FX are not poor people they are wealthy enough use banks.
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Shahnawaz Oct 02, 2022 09:44pm
I think it's good idea to stop devaluation of Rupee
thumb_up Recommended (0)
ABC DEF Oct 07, 2022 07:57am
bitcoin f these banks
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