‘Utilisation of Funds held in ESFCAs’: PRGMEA urges SBP to implement directives

LAHORE: The Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) has commended the State Bank of Pakistan for its directives issued on Feb 23, 2024, regarding the “Utilisation of Funds held in Exporters’ Special Foreign Currency Accounts” (ESFCAs).

However, the association has expressed strong concerns over the non-implementation of these directives by commercial banks, despite the passage of numerous days.

In a statement released on Monday, PRGMEA Central Chairman Mubashar Naseer Butt highlighted that the SBP, through its circular, had drawn attention to Para 40 of Chapter 12 (Exports) of the Foreign Exchange Manual. This section delineates the purposes for utilising retained funds in Exporters’ Special Foreign Currency Accounts (ESFCAs).

Butt noted that the central bank has further liberalised the utilisation of retained funds to facilitate exporters and promote ease of doing business. This includes allowing exporters to freely utilise funds held in ESFCAs for various payments abroad of current account nature, for their business purposes, without prior SBP approval. Additionally, on exporters’ request, Authorised Dealers may issue debit cards against ESFCAs balances.

Expressing dismay, Butt remarked that it is highly troubling that banks have completely disregarded this facilitation to exporters. There is a lack of practical commitment to adhering to the directive, reflecting weak administrative control of the central bank over the banking industry.

Butt emphasised the significance of the apparel industry as Pakistan’s leading national industry, providing employment to millions directly or indirectly, and contributing billions of dollars in foreign exchange earnings. He underscored the industry’s substantial export potential and its significant role in the growth of the Large Scale Manufacturing (LSM) sector.

Butt urged the State Bank of Pakistan to take strict notice of the non-implementation of its directives by the banking industry and called for immediate action to enforce the directives in both spirit and letter.

Copyright Business Recorder, 2024