KARACHI: The State Bank of Pakistan (SBP) on Tuesday granted some relaxations, for bringing export payments in 120 days, to those exports where irrevocable letters of credit has been issued with usance period upto 180 days. In January, the State Bank reduced the period of exports proceed realization by 60 days and exporters were asked to bring export proceeds within a maximum period of 120 days from date of shipment.
Earlier, the exporters were allowed to bring their export proceeds within a maximum period of 180 days. Accordingly, SBP amended the Para 6, Chapter 12 of Foreign Exchange (FE) Manual, which includes instructions relating to the export proceeds realizations.
However, now after this amendment, in view of the representation received from various Authorized Dealers, Chambers of Commerce & Industries and Exporters’ Associations, and to help exporters to fulfill their commitments, the SBP on Tuesday clarified that amendments introduced in January will not be applicable on such exports where irrevocable letters of credit with usance period upto 180 days were issued or established up to the date of issuance of above instructions. However, in all such cases, SBP has directed Authorized Dealers not to allow any change beyond 180 days in shipment date/expiry of LC/ enhancement in LC or shipment against expired LCs or any other terms and conditions relating to tenure of the LC after the issuance of the above circular.
Moreover, where the terms of sale/ irrevocable letter of credit provide for payment on 120 days’ usance from the date of shipment, it will be permissible for the exporter to repatriate the export proceeds within 135 days from shipment date.
SBP cuts realization period for exporters by 60 days
According to a circular issued on Tuesday, the revised sub-para (i) of para 6 would read as:”Full export value of goods exported from Pakistan and declared to the Customs authorities should be received in an approved manner, as embodied in State Bank of Pakistan’s (SBP) Notification No. F.E. 1/2022-SB dated the January 5, 2022 on the due date for payment or within one hundred and twenty (120) days from the date of shipment, whichever is earlier, or within such period as may be prescribed by SBP through specific or general instruction, through an Authorized Dealer either in convertible foreign currency in which the Authorized Dealer maintains accounts or in Pakistan rupee from a repatriable rupee account of a non-resident. In case of shipment on DP/CAD/ sight basis the payment should be received within 45 days from date of shipment.
However, where the terms of sale/irrevocable letter of credit provide for payment on 120 days’ usance from the date of shipment, it shall be permissible for the exporter to repatriate the export proceeds within 135 days from shipment date. Prior approval of the Exchange Policy Department, SBP should be obtained before arranging for payment in any manner other than that mentioned above.”
SBP mentioned that all other instructions will remain unchanged. SBP has advised the Authorized Dealers to bring the fresh amendments to the notice of all their constituents for meticulous compliance.
Copyright Business Recorder, 2022