Karachi, April 26, 2025 – In a recent case, a serious miscalculation by a leading Bank caused a substantial financial loss to an exporter, highlighting the critical importance of accurate handling of export proceeds.
The exporter had cited the State Bank of Pakistan’s (SBP) Foreign Exchange Circular No. 01 of 2023, which emphasized the timely repatriation of export proceeds under the guidelines specified in Para 6, Chapter 12 of the Foreign Exchange Manual.
However, instead of following the correct procedure, the Bank misinterpreted the directives. While converting and crediting the export proceeds into the exporter’s account, the Bank applied the Weighted Average Rate (WAR) instead of the prevailing current market rate. As a result, the exporter suffered a significant financial loss amounting to approximately Rs2.8 million.
Upon realizing the error, the exporter immediately raised the issue with the Bank. However, the Bank initially refused to accept the exporter’s interpretation of the guidelines, prompting the exporter to escalate the matter to the Banking Mohtasib of Pakistan (BMP) for intervention.
During a meeting between the Bank’s officials and the BMP representatives, it was clarified that the Bank’s understanding of the regulations was incorrect. Upon this realization, the Bank expressed its willingness to negotiate a settlement with the affected exporter. The BMP allowed the Bank a period of 30 days to resolve the matter amicably.
Despite the initial discussions, no meaningful progress was observed. Consequently, a hearing was held on September 9, 2024. During the proceedings, the Bank once again sought additional time of 10 days, to which the exporter agreed, showing a cooperative spirit.
Following this extension, the Bank informed the BMP office that it had compensated the exporter with an amount of Rs 2,791,422. The compensation was duly credited to the exporter’s account on October 2, 2024. The exporter confirmed receipt of the funds and acknowledged the settlement.
This case serves as a reminder of the crucial role that Banks must play in accurately handling exporters’ transactions. Misinterpretations or procedural lapses not only harm exporters financially but also undermine trust in the financial system. Exporters rely heavily on Banks for timely and fair conversion of their foreign earnings, and it is imperative for Banks to adhere strictly to regulatory guidelines to avoid such costly errors in the future.