The State Bank of Pakistan (SBP) has given its green signal to Bank AL Habib Limited (BAHL) and Allied Bank Limited (ABL) to commence operations of their wholly-owned Exchange Companies (ECs).
In a notice to the Pakistan Stock Exchange (PSX) on Friday, BAHL stated: “This refers to our previous announcement at PSX on September 22, 2023, regarding the Board’s approval to establish an EC as a wholly owned (100%) subsidiary of the bank with an authorized share capital of Rs1,000 million.”
“Alhamdolillah, we are pleased to inform you that subsequent to the issuance of Certificate of Incorporation from the Securities and Exchange Commission of Pakistan (SECP), the State Bank of Pakistan (SBP) has issued a license for Commencement of Operations to ‘AL Habib Exchange Company (Private) Limited’,” read the notice.
Last year in September, the Board of Directors of BAHL announced it will establish an EC as a wholly-owned subsidiary.
Meanwhile, a similar notice was issued by ABL to the PSX.
“SBP has issued ‘License for Commencement of Operations’ to M/s. ABL Exchange (Private) Limited,” read the notice.
The development comes following SBP’s decision to introduce ‘structural reforms’ in the EC sector in its bid to strengthen controls amid the massive fall in rupee’s value in the open market last year.
“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,” the central bank said back then.
Further, the SBP also raised the minimum capital requirement for EC from Rs200 million to Rs500 million, raising the barrier to entry for the private sector.
NOC for establishment of an EC
Moreover, in a separate statement, Bank of Punjab (BoP) also received a ‘No Objection’ from the central bank to establish an EC.
“State Bank of Pakistan has conveyed its ‘No Objection’ to The Bank of Punjab for establishing an exchange company in the name of ‘BoP Exchange Company (Pvt) Limited’,” added the statement.