KARACHI: The State Bank of Pakistan (SBP) on Monday reduced the retention period of foreign exchange in the shape of export receipts and remittances of export commission.
The central bank issued a circular related to retention of export proceeds with authorized dealers upon realization and remittance of export commission, brokerage and discount.
Through the circular the State Bank amended the Foreign Exchange Manual to implement the decision.
The SBP has taken yet another initiative to ensure availability of foreign currency within the commercial banks in order to support the local currency and balance of payment.
Prior to this the SBP had already imposed restriction a ban on bank financing for imported vehicles and certain conditions on financing for locally assembled motor vehicles. Furthermore, the SBP also imposed 100 per cent cash margin requirement for additional 114 imported items.
Prior to the latest initiative of amending Foreign Exchange Manual, there is no respite in rupee deterioration. The local unit fell to a fresh low of Rs170.80 to the dollar in interbank foreign exchange market.
However, through the latest circular the SBP reduced the retention period to three days from five days of export proceeds with the banks upon realization and remittance of export commission, brokerage and discount.
The SBP made following changes in the Foreign Exchange Manual:
(i) Para 7, Chapter 12 – Retention period of Export Proceeds with Authorized Dealers upon Realization
First sentence of Para 7 Chapter 12 has been replaced with the following:
“It is permissible for exporters to retain the export proceeds including ‘Advance Payments’ in foreign currency with an Authorized Dealer in Pakistan for three working days of receipt of funds by Authorized Dealer (value date of Nostro Account) and to sell the same within this period to any Authorized Dealer.”
(ii) Para 35 Chapter 12 – Remittance of Export Commission, Brokerage & Discount and Retention of Export Proceeds in Exporters Special Foreign Currency Account.
Sub-para (ii) (c) of para 35 of Chapter 12 has been replaced with the following:
“By remittances from Pakistan, when the full export proceeds are received, within three working days of the receipt of funds by Authorized Dealer (value date of Nostro Account). The Authorized Dealers should report the full export proceeds of the bill as “Purchase” and the amount of commission remitted should be reported as “Sale”.”