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$2,000 and above: ECs should carry out sales transactions through bank channels: SBPATN News

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KARACHI: To further strengthen the regulatory regime for exchange firms and improve banking channels, the State Bank of Pakistan (SBP) has banned exchange firms from cash sale transactions worth $2000 and above.

As per SBB’s new directives, ECs are required to conduct all foreign currency sales transactions of $2,000 or more against PKRs through bank channels.

The State Bank has instructed clearing houses that all foreign currency sales transactions of $2,000/- or more (equivalent in other currencies) against PKR should be conducted only through payment methods such as bank transfer/cheques from the customer’s personal bank account. It aims to further enhance transparency and improve documentation in foreign exchange transactions.

The move focuses on promoting the use of various banking channels, which are generally more secure, to meet the genuine foreign exchange needs of the public.

SBP has notified to amend instructions in Para 9 (i)(g) and Para 9 (iii)(g) of Chapter 3; and para 12(i)(d) of Chapter 8 of the Exchange Companies Manual for ‘B’ Category Exchange Companies and Exchange Companies.

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As per Para 9(i)(g) Chapter 3 of the Exchange Company Manual, now all foreign currency sales transactions of USD 2,000 or more or other currencies equivalent against PKR shall be conducted by the exchange companies through bank transfer or personal cheque. Customer’s account.

According to SBP, the transaction or instrument reference number and the name of the bank transferring the funds or issuing the instrument will be mentioned in the transaction receipt, issued by the transaction institutions, customer identification document number.

Additionally, under Para 9(iii)(g) Chapter 3 of the Exchange Companies Manual, all foreign currency sales transactions for outward exchange of USD 2,000 or more or equivalent in other currencies against PKR shall be effected through bank transfer/ from the customer’s personal account. please verify. The transfer agency should mention the transaction or instrument reference number and the name of the bank transferring the funds or the customer’s identification document number on the transaction receipt.

Similarly, as per Para 12(i)(d) Chapter 8 of the Manual of Exchange Companies, all foreign currency sale transactions of USD 2,000 or above or equivalent in other currencies against PKR shall be conducted through banks by Exchange Companies of category ‘B’. Transfer/cheque from customer’s personal account.

“The transaction or instrument reference number and the name of the bank transferring the funds or issuing the instrument should be mentioned in the transaction receipt along with the customer’s identity document number,” the SBP directed the “B” category transaction institutions.

The SBB has warned the exchange companies that failure to comply with these instructions will result in disciplinary action under the relevant provisions of the Foreign Exchange Regulation Act, 1947.

Pakistan Foreign Exchange Association President Malik Poston welcomed the SBP’s move, saying exchange firms would support all such initiatives to overcome the current cash crunch.

He said that the exchange companies are already fully complying with the directives of the SBB, which will help in further streamlining the currency business through the banking channel.

He asked the SBB to strictly monitor the rapid increase in online transactions through credit cards. “We have asked the SBP for stricter checks and balances on online trading through credit cards to curb the outflow of US dollars,” he added. Poston said he is in touch with Union Finance Minister Mifta Ismail and SBB officials to increase dollar inflow in the country.

Copyright Commercial Recorder, 2022

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