ISLAMABAD: Finance Minister Ishaq Dar has advised foreign exchange companies to ensure appropriate exchange rate for the betterment of the country.
Federal Minister Senator Mohammad Ishaq Dar held a meeting with heads of all the major Forex Exchange Companies of Pakistan at state Bank of Pakistan (SBP).
Senior Advisor to Prime Minister (SAPM) on Finance Tariq Bajwa, SAPM on Revenue Tariq Pasha, Governor SBP Jameel Ahmad and senior officers from Finance Division and State Bank of Pakistan attended the meeting.
The Finance Minister highlighting the economic situation of the country stated that the present government with its pragmatic policy decisions has not only arrested the decline but has also set the economy in the right direction.
Finance Minister also shared the priorities of the present government and expressed resolve of the Government to ensure stable economic and fiscal policies and requested the forex companies to ensure appropriate exchange rate for the betterment of the country.
The leading Exchange companies of Pakistan showed complete trust in Government’s fiscal and monetary policies and committed to the Finance Minister their full support to ensure economic and financial strengthening of Pakistan.
KARACHI: State Bank of Pakistan (SBP) on Friday made it mandatory for exchange companies to make foreign currency transactions in the presence of functional CCTV system.
The central bank in a circular noted that CCTV Systems of Exchange Companies and Exchange Companies of ‘B’ Category should be functional at all times (i.e. 24 hours a day and 7 days a week) as required under existing regulations.
However, in order to ensure transparency, it has been advised that Exchange Companies and Exchange Companies of ‘B’ Category shall not carry out any business activity during the period in which CCTV system is non-functional at any of their outlet for any reason, including technical faults, until the functionality of the CCTV system is restored.
Moreover, minimum preservation period of video recording through CCTV system has been enhanced from two to six months or until the inspection of the company by SBP, whichever is earlier.
This would ensure availability of CCTV recording for audit/inspection purposes.
Furthermore, the SBP also made it mandatory for exchange companies to make sales transactions through their bank accounts.
The central bank said that the SBP had amended foreign exchange regulations with an objective to promote documentation and transparency in the foreign exchange transactions between exchange companies.
In terms of revised regulations, it has been made mandatory for Exchange Companies, Franchises of Exchange Companies and Exchange Companies of ‘B’ Category to settle Pakistan Rupee consideration of all foreign currency purchase/ sale transactions conducted among themselves through their bank accounts.
Following is the circular issued by the SBP for making changes:
Attention of Exchange Companies (ECs) and Exchange Companies of ‘B’ Category (ECs-B) is invited towards instructions contained in Paras 9 (i)(b) of Chapter 3 and Para 12 (i)(a) of Chapter 8 of Exchange Companies Manual, in terms of which, they are allowed to purchase/sale foreign currencies from each other, as per their scope of business.
In order to promote documentation and transparency in the foreign exchange transactions, it has been decided that, henceforth, Pakistan Rupee consideration of currency exchange transactions between ECs, ECs-B and franchises of ECs shall be conducted through the bank accounts of respective ECs, ECs-B and franchises of ECs. Accordingly, the relevant Paras of Exchange Companies Manual would stand amended as under:
Purchase and sale of foreign exchange in “Ready”, “Tom” and “Spot” value dates from/to other Exchange Companies. Further, Exchange Companies, including their Franchises, shall settle Pakistan Rupee consideration of all foreign currency purchase/ sale transactions conducted with other Exchange Companies, Franchises of Exchange Companies, and Exchange Companies of ‘B’ Category only through their bank accounts.
Para 12(i)(a)
Exchange Companies of ‘B’ Category are authorized to deal in purchase and sale of foreign currency notes and coins from individuals, Exchange Companies and Exchange Companies of ‘B’ category in ‘Ready’ value only. Further, Exchange Companies of “B” Category shall settle Pakistan Rupee consideration of all foreign currency purchase/sale transactions conducted with other Exchange Companies, franchises of Exchange Companies and Exchange Companies of “B” Category only through their bank accounts.
Moreover, Exchange Companies and Exchange Companies of ‘B’ Category are advised to ensure that CCTV should be functional at all times (i.e. 24 hours a day and 7 days a week), as required in terms of Para 1(vii)(c) of Chapter 4 and Para 16B(iii) of Chapter 8, respectively, of Exchange Companies Manual. In cases, where CCTV system is non-functional at an outlet for any reason, including technical faults, Exchange Companies and Exchange Companies of ‘B’ Category shall not carry out any business activities in the said outlet during such time, until the functionality of the CCTV system is restored.
Further, minimum preservation period of video recording as given in Para 1(vii (d)) of Chapter 4 and Para 16B (iv) of Chapter 8 of Exchange Companies Manual shall be six months or until inspection of the company by SBP, whichever is earlier.
KARACHI: State Bank of Pakistan (SBP) on Friday made it mandatory the transactions of foreign currency above $2,000 through banking channels in order to document sales and purchases of the foreign currency.
In this regard, the central bank amended Exchange Companies Manual to ensure documentation of buying and selling of the foreign currency.
The SBP in a statement said that to further enhance transparency and promote documentation in the foreign exchange transactions, the central bank advised the Exchange Companies that all foreign currency sale transactions of $2,000/- or above (equivalent in other currencies) against Pakistani Rupee (PKR) should only be conducted through payment modes, such as bank transfer/cheques from the personal bank account of the customer.
“This step is also focused on encouraging the general public to use various banking channels, which are generally more secure, to fulfill their genuine foreign exchange needs,” the SBP added.
The central bank issued a circular in this regard inviting attention of Exchange Companies and Exchange Companies of ‘B’ Category to instructions contained 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.
In order to further strengthen the regulatory regime for Exchange Companies, and encourage customers to use banking channels for purchase of foreign exchange from Exchange Companies, the existing regulations prescribing the scope of business of Exchange Companies have been amended, which will be effective immediately:
Para 9(i)(g) Chapter 3 of Exchange Companies Manual
All foreign currency sale transactions of $2,000/- or above (or equivalent in other currencies) against PKR shall be conducted by the Exchange Companies through bank transfer/ cheque from the personal account of the customer. The transaction/instrument reference number and the name of the bank transferring funds/ issuing the instrument shall be mentioned on the transaction receipt along with identification document number of the customer.
Para 9(iii)(g) Chapter 3 of Exchange Companies Manual
All foreign currency sale transactions for outward remittance of $2,000/- or above (or equivalent in other currencies) against PKR shall be conducted by the Exchange Companies through bank transfer/ cheque from the personal account of the customer. The transaction/instrument reference number and the name of the bank transferring funds/ issuing the instrument shall be mentioned on the transaction receipt along with identification document number of the customer.
Para 12(i)(d) Chapter 8 of Exchange Companies Manual
All foreign currency sale transactions of $2,000/- or above (or equivalent in other currencies) against PKR shall be conducted by the Exchange Companies of ‘B’ Category through bank transfer/cheque from the personal account of the customer. The transaction/instrument reference number and the name of the bank transferring funds/ issuing the instrument shall be mentioned on the transaction receipt along with identification document number of the customer.
The SBP warned that failure to comply with these instructions shall attract regulatory action under the relevant provisions of the Foreign Exchange Regulation Act, 1947.
KARACHI: The State Bank of Pakistan (SBP) on Thursday allowed exchange companies to enter into agreements with Authorized Dealers (ADs)/banks for disbursement of home remittances.
The central bank invited attention of Exchange Companies (ECs) to instructions contained in Para 9 (ii), Chapter 3 of Exchange Companies Manual regarding the business of inward home remittances.
The SBP said in order to facilitate the disbursement of home remittances, Exchange Companies (ECs) are henceforth allowed to enter into agreements with the Authorized Dealers (ADs) to act as their sub-agents for disbursement of home remittances in PKR to beneficiaries, received by ADs through their international tie-ups.
As home remittance disbursement sub-agent of ADs, ECs are advised to ensure the following:
No home remittances related incentive, as provided by the Government of Pakistan, shall be claimed by the ECs for the transactions disbursed as sub-agent of an AD. ECs shall also not recover any funds from remittance recipients. However, ADs can share with ECs any part of incentive for home remittances, as provided to ADs by the government.
All such transactions shall be recorded by the ECs in their Core Business Application on real time basis; however, ECs are not required to report such disbursements to SBP under ITRS, as ADs are reporting such transactions to State Bank under ITRS.
The amount disbursed under such agreement shall not be accounted for the calculation of outward remittance limit, as prescribed in Para 9(iii) (c) ibid.
The SBP said failure to comply with the above instructions shall attract enforcement action against the concerned Exchange Company under the relevant provisions of the Foreign Exchange Regulation Act, 1947.
ISLAMABAD: Exchange companies have been brought under the ambit of withholding tax and now they are required to deduct tax on payment to international money transfer operators (MTOs).
The change has been proposed through budget 2022/2023, which was presented on June 10, 2022.
Through Finance Bill, 2022 amendments suggested to Section 152 of the Income Tax Ordinance, 2001.
According to amendments, new sub-sections have been proposed:
“(1DC) Every exchange company licensed by the State Bank of Pakistan shall deduct tax at the time of making payment of service charges or commission or fee, by whatever name called, to the global money transfer operators, international money transfer operators or such other persons engaged in international money transfers or cross-border remittances for facilitating outward remittances, at the rates given in Division IV, Part I of the First Schedule:
Provided that where such person retains service charges or commission or fee, by whatever name called from the amount payable to the exchange company on any account, the exchange company shall be deemed to have paid the service charges or commission or fee, by whatever name called and the exchange company shall collect the tax accordingly.
(1DD) Every banking company while making payment to card network company or payment gateway or any other person, of any transaction fee or licensing fee or service charges or commission or fee by whatever name called or interbank financial telecommunication services, shall deduct tax at the rates given in Division IV, Part I of the First Schedule:
Provided that where card network company or payment gateway or any other person retains money in relation to aforementioned services from the amount payable to the banking company on any account, the banking company shall be deemed to have paid the amount and the banking company shall collect the tax accordingly.”;
According to Income Tax Ordinance, 2001 updated up to June 30, 2021, the rate of tax imposed under section 6 on payments to non-residents shall be 15 per cent of the gross amount of the royalty or fee for technical services and 5 per cent of the gross amount of the fee for offshore digital services.
KARACHI: The State Bank of Pakistan (SBP) has taken regulatory actions against an exchange company and suspended its operations, according to a statement issued on Friday.
The central bank suspended with immediate effect the authorization of an Exchange Company namely M/s. Noble Exchange International (Pvt) Limited till further orders for violation of SBP rules and regulations, according to a statement issued on Friday.
The Exchange Company, its head office, branches, franchises have been debarred from undertaking any kind of business activity during the suspension period.
KARACHI: The State Bank of Pakistan (SBP) on Thursday introduced an incentive scheme of surrendering dollars of home remittances for exchange companies.
The scheme is operational from February 04, 2022, the SBP said in a circular.
Home remittances are a major source of income for families of expatriate Pakistanis and contribute significantly in country’s economic activities.
The SBP together with the government has introduced various policy initiatives, from time to time, to increase the flow of home remittances through formal channels.
In order to further encourage the exchange companies to mobilize home remittances, the government has decided that the exchange companies will be provided an incentive of Re1 for each US dollar of home remittances surrendered in interbank market provided that the exchange companies surrender 100 per cent of the foreign exchange received as inward home remittances.
The incentive of Re 1 for each US dollar surrendered in interbank market will be fixed irrespective of exchange rate, however, it is clarified that the incentive will not be allowed to exceed one per cent of exchange rate in case of Pak Rupee appreciation.
In order to become eligible for the incentive, the exchange companies shall open and maintain a separate foreign currency account for receiving inward home remittances through Money Transfer Operators (MTOs) and surrendering the foreign exchange in the interbank market.
The said foreign currency account will be used for transactions related to inward home remittances only and any amount received as commission or exchange gain etc. from MTOs shall not be credited in this account.
The requirement for surrendering foreign exchange vide Para 9 (ii) (d), Chapter 3 of Exchange Companies Manual, has been amended accordingly, as follows, to effect above mentioned incentive scheme: “(d) Exchange Companies shall surrender 100 per cent of foreign currencies received on account of inward home remittances, in equivalent US Dollars, in the interbank market on the same day.”
The exchange companies shall maintain complete record of transactions related to inward home remittances, amount surrendered in the interbank market and claims submitted to the State Bank of Pakistan under this scheme.
The Standard Operating Procedures regarding submission of claims by the Exchange Companies will be issued separately.
The exchange companies will ensure availability of all relevant record for examination by State Bank’s inspection teams. The violation of any instruction on the part of Exchange Companies would attract enforcement action under the relevant provisions of the Foreign Exchange Regulation Act, 1947, the SBP added.
ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Friday approved incentive program for exchange companies on surrendering dollars in interbank.
KARACHI: The exchange companies are required to deploy biometric verification system (BVS) for transactions of foreign currencies from November 6, 2021.
“All exchange companies are advised to deploy BVS as provided by NADRA at their outlets for biometric verification after November 05, 2021,” the State Bank of Pakistan (SBP) said in a communication on Thursday.
The SBP said that exchange companies were required to implement the BVS latest by October 22, 2021. Towards this, State Bank had requested National Database Registration Authority (NADRA) to facilitate the exchange companies in the implementation of BVS.
“However, given the technical challenges currently faced by the exchange companies (EC Sector), NADRA proposed to offer an android based BVS for exchange companies.”
The State Bank on request of the Exchange Companies Association of Pakistan (ECAP) allowed the exchange companies to accommodate its customers by using the services of another facility of NADRA named e-Sahulat till the implementation of android based BVS i.e. November 05, 2021.
The SBP said that it forwarded the technical requirements, received from NADRA, to exchange companies with an objective to ensure implementation of BVS with the given timelines. The SBP further stated that any technical and financial matter related to implementation of BVS is the sole discretion of NADRA and respective exchange companies. “Therefore, ECAP or individual exchange company may like to approach NADRA directly for any technical / financial issues, regarding implementation and procurement of systems, devices etc.”
The SBP advised all exchange companies to deploy BVS as provided by NADRA at their outlets for biometric verification after November 05, 2021. However, any relaxation / extension in the timeline shall only be allowed to the companies that will approach the SBP with genuine reasons along with an explicit time bound implementation plan.”
The SBP said NADRA has informed that the android-based BVS could also be integrated with the core business application of the exchange companies. “Therefore, all exchange companies are required to continue their coordination with NADRA to ensure that the integrated system is implemented within the stipulated timeline of June 30, 2022,” the SBP added.
KARACHI: The State Bank of Pakistan (SBP) has made biometric verification mandatory for foreign currency sale transactions.
The central bank on Wednesday issued amendments to the exchange companies manual to stop the undesirable outflow of cash foreign currency.
The SBP introduced following regulatory measures:
i. Persons travelling to Afghanistan will be allowed to carry only USD1,000/- per person per visit with a maximum annual limit of USD6,000.
ii. Exchange companies will be required to conduct biometric verification for all foreign currency sale transactions equivalent to USD500/- and above and outward remittances. This requirement will be applicable with effect from October 22, 2021.
iii. Exchange Companies will sell the cash foreign currency and make outward remittances, equivalent to USD10,000/- and above, against receipt of funds through cheque or banking channels only.
The SBP said that the regulatory measures will help to improve documentation of sale of foreign currency by exchange companies and place a check on undesirable outflow of foreign currency.
Following is the text of circular No. 6 of the SBP
Amendments in Instructions for Exchange Companies
Attention of Exchange Companies and Exchange Companies of ‘B’ Category is invited to instructions contained in Para 9 (i) (f)&(g), 9(iii) (f)&(g) of Chapter 3 and Para 12 (i) (c) & (d) of Chapter 8 of Exchange Companies Manual.
2. In order to strengthen regulatory regime for Exchange Companies, it has been decided to amend/change the applicable regulations relating to scope of business of Exchange Companies and Exchange Companies of ‘B’ Category. Accordingly, the relevant instructions in the following Paras of Exchange Companies Manual stand replaced as under:
Para 9 (i) (f) Chapter 3 of Exchange Companies Manual
“For all foreign currency sale transactions equivalent to USD 500/- or above, Exchange Companies shall retain copies of identification documents i.e., Computerized National Identity Card (CNIC) /National Identity Card for Overseas Pakistanis (NICOP)/ Pakistan Origin Card (POC) / Passport (having valid visa on it or any other proof of legal stay of a foreigner in Pakistan) after having seen the document in original. In addition, Exchange Companies shall also carry out biometric verification of Pakistani Nationals for all such transactions and maintain the record thereof”.
Para 9 (i) (g) Chapter 3 of Exchange Companies Manual
“All sale transactions of USD 10,000/- or above (or equivalent in other currencies) shall be conducted by the Exchange Companies through Cheque/ Bank Transfer from the personal account of the customer. Instrument/ transaction reference number and issuing bank’s name shall be mentioned on the transaction receipt along with identification document number of the customer.”
Para 9 (iii) (f) Chapter 3 of Exchange Companies Manual
“Exchange Companies shall retain copies of identification documents i.e., Computerized National Identity Card (CNIC)/National Identity Card for Overseas Pakistanis (NICOP)/Pakistan Origin Card (POC)/Passport (having valid visa on it or any other proof of legal stay of a foreigner in Pakistan) for conducting transfers/ remittances transaction regardless of the amount. The name, address and identification document number of the customer shall also be mentioned on the receipt after due verification and with stamp of “original seen”. In addition, Exchange Companies shall also carry out biometric verification of Pakistani Nationals for all transactions and maintain record thereof”.
Para 9 (iii) (g) Chapter 3 of Exchange Companies Manual
“All outward transactions of USD 10,000/- or above (or equivalent in other currencies) shall be conducted by the Exchange Companies through Cheque/ Bank transfers from the personal account of the customer. Instrument/ transaction reference number and issuing bank’s name shall be mentioned on the transaction receipt along with identification document number of the customer.”
Para 12 (i) (c) Chapter 8 of Exchange Companies Manual
“For all foreign currency buy and sale transactions equivalent to USD 500/- or above, Exchange Companies of ‘B’ Category shall retain copies of identification documents i.e., Computerized National Identity Card (CNIC) /National Identity Card for Overseas Pakistanis (NICOP)/ Pakistan Origin Card (POC) / Passport (having valid visa on it or any other proof of legal stay of a foreigner in Pakistan) after having seen the document in original. In addition, Exchange Companies of ‘B’ Category shall also carry out biometric verification of Pakistani Nationals for all such sale transactions and maintain the record thereof”.
Para 12 (i) (d) Chapter 8 of Exchange Companies Manual
“All sale transactions of USD 10,000/- or above (or equivalent in other currencies) shall be conducted by the Exchange Companies of ‘B’ Category through Cheque/ Bank Transfer issued from the personal account of the customer. Instrument/ transaction reference number and issuing bank’s name shall be mentioned on the transaction receipt along with identification document number of the customer.”
3. All above instructions are applicable with immediate effect. However, for implementing the requirements for biometric verification, Exchange Companies and Exchange Companies of ‘B’ Category shall make necessary arrangements, including procurement of hardware and software and establishing connectivity with NADRA latest by October 21, 2021, while the instructions shall be applicable with effect from October 22, 2021.
4. All other terms and conditions on the subject shall remain unchanged.
