State Bank of Pakistan (SBP) Foreign Exchange Adjudicating Court has imposed a cumulative penalty of Rs 7.331 billion on seven banks and a textile mill for non-repatriation of export proceeds. Sources said the penalty was imposed in the last week of January, however, some parties have gone into appeal and got stay order from the Sindh High Court against the decision. This is the ever highest penalty imposed in any case of foreign exchange non-repatriation, they added.
There were some 506 complaints of non-repatriation of export proceeds against Fateh Textile Mills Limited (FTML) under the Foreign Exchange Regulation Act 1947 (FERA). Saleem Rehmani Adjudicating Officer Foreign Exchange Adjudicating Court SBP, on 27th January 2016, decided the complaints and imposed a cumulative penalty of Rs 7.331 billion, under the FER Act 1947, on FTML and seven banks for being negligent in realisation of export processed.
The following penalties have been imposed by the SBP Foreign Exchange Adjudication Court: Rs 3.83 billion fine on Fateh Textile Mills, Rs 1.95 billion on Allied Bank Limited (ABL), Rs 1.02 billion on National Bank of Pakistan (NBP), some Rs 0.267 billion on MCB Bank and Rs 0.257 billion on United Bank Limited (UBL).
In addition, modest penalties were imposed on three other banks in the same decision: Rs 1 million on Meezan Bank, Rs 4 million on Askari Bank and Rs 2 million on Deutsche Bank. The court also asked the directors of Fateh Textile Mills to repatriate the entire defaulted foreign exchange within 90 days from the issuance of the order. Sources said that almost all parties have approached the Sindh High Court against the SBP Foreign Exchange Adjudicating Court's decision. So far, it has been confirmed that MCB, ABL, UBL, NBP and Meezan Bank have filed constitutional petitions in the Sindh High Court, and obtained stay orders.
While, deciding the case, the Court has also cautioned State Bank for not doing enough efforts towards realisation of foreign exchange proceeds in these complaints, they added.
They said that the judgement and imposition of ever-highest penalties by the SBP Foreign Exchange Adjudicating Court is a warning to the banks, which accepts Form-E undertakings from exporters without making proper verification or inquiry. Now banks will be more conscious in relation to repatriation of export proceeds, they added. In addition, the case decision is an eye opener for all those exporters who are deliberately delay repatriation of export proceeds within prescribed periods.