No change in instruction on purchase of foreign currency notes by banks: SBP

The State Bank of Pakistan (SBP) on Monday said that no change has been made in instruction on purchase of foreign currency notes by banks. According to a statement issued by SBP, 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. These instructions/circulars etc. are made part of the Foreign Exchange Manual. SBP is in process of revision of Foreign Exchange (FE) Manual in 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 No. 8, 9 & 11 have been revised through FE Circular No. 03 of 2019 dated July 16, 2019.
According to SBP, one of these revised chapters, 11, includes regulations on "Dealings in Foreign Currency Notes and Coins" etc. by the Authorized Dealers (banks). With respect to revised Chapter 11, it has come to our notice that there are some confusions/misinterpretations regarding Para 2 suggesting that SBP has allowed the banks to sale/purchase foreign currencies to/from public by amending the existing regulations.
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 authorised branch is permitted to deal in foreign currency notes, coins, deposits, credits, drafts, traveller's cheques, letters of credit and bills of exchange, expressed or drawn in Pakistan currency but payable in any foreign currency." {(Para 2(iii), Chapter 2 of Foreign Exchange Manual}, SBP added.
Since Chapter 11 of the FE Manual specifically governs regulations regarding dealings in foreign currency notes and coins etc. by the authorised dealers, therefore, the instructions related to sale/purchase of foreign currency notes have been added in Chapter 11 with emphasis on Authorised Dealers regarding compliance with AML/CFT regulations.
Further, the existing instructions issued by SBP vide Notification No. F.E.1/2012-SB dated the 16th June, 2012 regarding currency declaration to the Customs authorities by the inbound travellers on amount exceeding US$ 10,000, or equivalent in other currencies, have also been incorporated in revised Chapter 11.