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KARACHI: In a major move to contain the outflow of foreign exchange from the country, the State Bank of Pakistan (SBP) has reduced the existing foreign currency cash carrying limits by 50 percent for travel purposes with immediate effect.

The State Bank on Tuesday rationalized limits for Foreign Exchange Cash Carrying for travel and Cross Border Transactions through Debit or Credit Cards to further streamline the foreign exchange business.

The SBP has reduced the foreign currency cash carrying limits by 50 percent for foreign travellers. As per the revised limits individuals with age 18 years and above (adults) can now take out of Pakistan foreign currency (FCY) equivalent to USD 5,000 per visit as against the previous limits of USD 10,000 per person per visit USD or equivalent in other foreign currencies.

Further, the annual ceiling to take out FCY for adults will also reduce from USD 60,000 to USD 30,000 or equivalent in other foreign currencies.

In addition, as per fresh directives, those below the age of 18 years (minors) can carry out FCY equivalent to USD 2,500 per visit. Further, the annual ceiling to take out FCY for minors will be USD 15,000 down from USD 30,000.

Previously, there were two categories for travellers below 18 years of age. The 5 years limit was USD 1,000 with an annual limit of USD 6,000. In addition, from 5-18 years cash carrying limit was USD 5,000 with annual limit of USD 30,000. However, now a single category has been introduced with a maximum limit of $ 2,500 for below 18 years

Per visit limits will be applicable immediately, while the annual limits will be applicable from January 1, 2023. The annual limits will be for a calendar year starting from the year 2023. However, for calendar year 2022, the existing annual limits will continue to be effective till December 31, 2022.

According to SBP, the existing limits for travelling to Afghanistan will remain unchanged. For Afghanistan maximum limit per person per visit USD or equivalent in other foreign currencies is $ 1,000 with annual ceiling amounted to USD 6,000 per person.

Foreign inflows at a low ebb

SBP has mentioned that any person taking foreign currency out of Pakistan will make a declaration to the Customs Authorities at the time of leaving the country.

In addition, the State Bank has observed that debit/ credit cards are being used for transactions, which are not aligned with the profile of the individual or are intended for commercial purposes.

Therefore, SBP has advised banks to ensure that the use of debit/ credit cards for international transactions is aligned with the profile of card holders and for their personal needs only.

Besides, an annual limit of USD 30,000 has been prescribed for individuals for international transactions. It is emphasized that the purpose of debit/ credit cards is to facilitate individuals in making payments for transactions that are of personal nature.

The limits on these cards, as well as, payments through them, both domestic and international, should; therefore, be aligned with the profile of the card holder. It shall be the responsibility of a customer to ensure that his/ her annual limit is not breached at any time. However, banks are required to monitor these limits on a consolidated basis for each individual.

SBP has advised banks (Authorized Dealers) to conduct proper due diligence of the individual customers at the time of their onboarding/ update of risk profiles and duly incorporate their cross-border payment needs through cards in their profiles.

ADs are also advised to ensure that issuance of multiple cards to a single customer are commensurate with their risk profile and are monitored collectively. Further, ADs should only allow those card based cross-border transactions, which are in-sync with the personal needs of the customers and have no commercial purpose.

Although, it is the primary responsibility of a customer to ensure that his/ her annual limit is not breached at any time, ADs will be required to institute a mechanism of ongoing monitoring whereby card based cross-border payments by individuals through single/ multiple cards are only allowed in accordance with the limit prescribed above and as per the risk profile of the customer.

As per SBP directives, banks desirous to facilitate their business customers may issue corporate cards, to be used strictly in accordance with the applicable provisions of the Foreign Exchange Manual and the profile of the customer. ADs shall institute a robust mechanism to monitor the payments through such corporate cards.

Banks have been asked to run an awareness campaign to inform their customers about the contents of this circular and the fact that cross-border commercial payments through cards issued to individuals are not permissible.

SBP has strictly advised banks to ensure meticulous compliance of these instructions and bring the same to the notice of all their constituents. Any non-compliance of above instructions may be dealt with under relevant provisions of the Foreign Exchange Regulation Act, 1947 and any pecuniary or administrative action, as deemed necessary, may be initiated against the delinquent ADs, the SBP warned.

According to SBP, as regards use of cards for cross border transactions for meeting legitimate business-related needs, a framework for acquisition of digital services is already available in Para 14A, in Chapter 14 of the Foreign Exchange Manual, in terms of which entities intending to acquire digital services can designate a bank to use this facility as per respective limits defined in the said framework.

Copyright Business Recorder, 2022

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