Askari Bank Limited, a subsidiary of Fauji Foundation, announced on Friday it will establish an Exchange Company (EC) as a wholly-owned subsidiary, becoming the eighth banking entity to make such an announcement to date.

The development was shared by the commercial bank in its notice to the Pakistan Stock Exchange (PSX).

“The Board of Directors of Askari Bank Limited (AKBL) in its meeting held on October 27, 2023 has approved the establishment of an EC with an authorized share capital of Rs1,000 million (Rs1 billion),” read the notice.

The bank said establishment of the EC is subject to approval and clearance by the State Bank of Pakistan (SBP), Securities & Exchange Commission of Pakistan (SECP) and completion of other regulatory compliance requirements.

“This EC shall be a wholly owned subsidiary of AKBL” it added.

Last month, the SBP, in its bid to strengthen controls amid the massive fall in rupee’s value in the open market, decided to introduce ‘structural reforms’ in the EC sector.

“As part of these reforms, leading banks actively engaged in foreign exchange business will establish wholly-owned Exchange Companies (EC) to cater to the legitimate foreign exchange needs of general public,” said the SBP in a statement.

Since then, many banks have announced they would establish an EC as a wholly-owned subsidiary: Habib Metropolitan Bank, Bank Alfalah, Faysal Bank Limited (FABL), Bank Al Habib Limited (BAHL), MCB Bank Limited, Meezan Bank Limited and United Bank Limited (UBL).

The SBP has also raised the minimum capital requirement for EC from Rs200 million to Rs500 million, raising the barrier to entry for the private sector.