The State Bank of Pakistan (SBP) on Tuesday suspended with immediate effect the authorisation of two Exchange Companies due to violation of regulatory instructions.
In a statement, it notified the suspension of Swiss International Exchange Company-B (Pvt.) Limited and Great Union Exchange Company-B (Pvt.) Limited for three months due to "serious violations of regulatory instructions".
“The SBP has advised both firms to strengthen their internal control functions and submit a report of corrective measures to be taken,” it said.
“Furthermore, the authorisation of one branch each of Swiss International Exchange Company and Great Union Exchange Company, as mentioned hereafter, has been cancelled with immediate effect.”
SBP initiates strict monitoring of forex operations
Both Exchange Companies, their head offices, branches/outlets have been restricted from undertaking any kind of business activity during the suspension period.
The development comes at a time when the rupee has come under renewed pressure, depreciating for the eighth successive session in the inter-bank market on Tuesday. However, before it, the rupee fell in the open market with the spread between the two widening to as much as Rs8-10 in the previous week.
Earlier in August, the SBP initiated strict monitoring of foreign exchange operations of exchange companies and banks in order to control the volatility in the exchange rate.
It also suspended the operations of four branches of two exchange companies for violation of SBP regulations.
SBP to enhance monitoring of foreign exchange operations
“In view of volatility in the exchange rate and the difference between the inter-bank rate and the rate offered by Exchange Companies (ECs) and banks to their customers, the State Bank has increased the monitoring of the foreign exchange operations of ECs and banks,” it said in August.
Acting upon its initiative, the SBP also started inspections of a number of exchange companies and banks to inspect the currency operation.
During these surprise visits, SBP suspended the operations of four branches of two ECs namely Galaxy Exchange Co and Al-Hameed International Money Exchange Co, for violation of SBP regulations.
According to the SBP, it also imposed monetary penalties on some ECs in the recent past for violating the rules and regulation issued by SBP for currency operation. Besides, due to violations of SBP instructions, arrangements of 13 franchises have been terminated by six different ECs in the recent past.