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  • FOREIGN CURRENCY ACCOUNTS: SBP says new regulations to strengthen forex regime

    FOREIGN CURRENCY ACCOUNTS: SBP says new regulations to strengthen forex regime

    KARACHI: State Bank of Pakistan (SBP) has said that recently issued regulations related to foreign currency account have been aimed to strengthen the foreign exchange regime in the country.

    “The recently issued rules aim to provide a regulatory framework for the operation of individual foreign currency accounts,” the SBP said in a statement issued on Saturday-Sunday midnight.

    Such a framework represents a continuation of the State Bank of Pakistan’s efforts to strengthen the foreign exchange regime and make it more market-oriented.

    Looking ahead, SBP will continue to take steps to facilitate greater use of banking channels for individuals to meet all their foreign exchange needs.

    The SBP said that on October 06, 2020, the Federal Government issued Foreign Currency Accounts Rules, 2020 under the provisions of Protection of Economic Reforms Act, 1992.

    There has been no change in the general or special permissions given by the State Bank to individuals under the foreign exchange regulations. According to paragraph iv, Chapter 6 of the Foreign Exchange Manual, foreign currency accounts can be fed by remittances received from abroad, travelers’ cheques issued outside Pakistan and encashment of securities issued by Govt. of Pakistan.

    A foreign currency account of a citizen of Pakistan resident in Pakistan can also be fed with cash foreign currency only if the account holder is a filer as defined in Income Tax Ordinance, 2001.

  • No restriction on withdrawal, transfers from foreign currency accounts: ministry

    No restriction on withdrawal, transfers from foreign currency accounts: ministry

    ISLAMABAD: The ministry of finance on Friday issued rules governing foreign currency accounts of individuals under which there shall be no restriction on cash withdrawal or transfers from the foreign currency account.

    The ministry issues rules governing foreign currency accounts of individuals, under which a foreign currency account of an individual may be credited with the remittances received from abroad through banking channel except:

    — payment for goods exported from Pakistan;

    — payment for services rendered in or from Pakistan;

    — proceeds of securities issued or sold to non-residents; and

    — any foreign exchange borrowed from abroad under any general or special permission of the State Bank of Pakistan (SBP).

    It said that the SBP may issue any general or special permission for credit to the account.

    The rules however, stated that a foreign currency account may be credited through transfer from other individual foreign currency account.

    “Proceeds realized on account of profit, return and principal amount of investment made in any foreign currency dominated or foreign currency linked scheme of Government of Pakistan may be credited into the account,” it said.

    A foreign currency account shall not be credited with any foreign exchange purchased from an authorized dealer, exchange company or money changer except as allowed by the SBP through general or special permission under any law. However, foreign currency brought in from abroad and duly declared at the point of entry into Pakistan with Pakistan Customs may be credited in the account.

    The rules explained that there shall be no restriction on cash withdrawal or transfers from the foreign currency account.

  • SBP allows banks to outsource cash management function

    SBP allows banks to outsource cash management function

    KARACHI: State Bank of Pakistan (SBP) on Thursday allowed banks to outsource their case processing functions in order to provide more flexibility.

    The SBP said that through Circular No. 03 /2015 dated August 26, 2015, under which the banks required to automate cash processing function and disburse only machine authenticated good quality banknotes of higher denomination to the public.

    Presently all banks are issuing machine processed banknotes (Rs100 and above) to the public.

    The SBP said that the Cash Management System (CMS) has given flexibility to banks to either have their own cash processing facilities or make arrangements with other banks having the required capacity to get their cash processed.

    The outsourcing of processing of higher denominated banknotes was, however, kept restricted to other banks only having the requisite capacity as CMS did not allow outsourcing of this function to commercial cash processing companies.

    In order to further enhance the flexibility for banks to get their cash processed and encourage greater innovation and development of cost effective models for cash processing, it has been decided to allow banks to outsource their cash processing functions.

    “The banks may thus outsource their cash processing functions (sorting, authentication, and packing) for all denominations of banknotes to such cash processing companies having capacity to process the cash in full conformity with the CMS instruction.”

    Banks shall ensure that the cash processing company (service provider), if any engaged, operates in full conformity with the CMS instructions issued vide FD Circulars No. 03 /2015 dated August 26, 2015 and No. 02 / 2017 dated March 10, 2017 as amended from time to time.

    It is reiterated that compliance with the CMS instructions is the responsibility of banks outsourcing cash processing and any non-compliance of instruction by the service provider shall, for all intents and purposes be treated as non-compliance by the concerned bank, making the bank liable to penal action under the CMS.

    Banks shall contractually bind the service provider that SBP may conduct surprise visits of its CPCs, to assess the control environment and regulatory compliance regarding CMS.

    The Banks while engaging the service provider shall ensure compliance with SBP instructions on outsourcing arrangement with third parties, as issued vide BPRD Circular No. 6 of 2019 dated December 17, 2019, as amended from time to time.

    The Banks shall report all such arrangements to Finance Department SBP along with details of branches and ATMs to be fed through the outsourced service providers within seven (7) days of signing of contract with the service provider. The Banks shall also share the address(es) of the cash processing centers of the service provider and contact details of the CEOs and other senior management for SBP’s information and record.

  • SBP issues carrot, stick policy for banks on housing loan targets

    SBP issues carrot, stick policy for banks on housing loan targets

    KARACHI: The State Bank of Pakistan (SBP) has adopted a policy of carrot and stick for banks related to mandatory targets for housing/construction financing.

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  • SBP softens quarantine for banknotes processed through certified machines

    SBP softens quarantine for banknotes processed through certified machines

    KARACHI: State Bank of Pakistan (SBP) on Friday relaxed the condition for banks of ensuring 14-day quarantine period for those banknotes processed through machines certified by Pakistan Council of Scientific and Industrial Research (PCSIR).

    The SBP said that it had imposed a condition on May 04, 2020 under which banks were advised to quarantine cash collected from the public for fourteen (14) days before re-issuing the same.

    The SBP further said that the 14- day quarantine for banknotes was introduced in line with the international practices and World Health Organization (WHO) guidelines.

    In view of availability of a number of banknote disinfection machines and technologies, it has been decided that the banks shall have the option to either continue with the fourteen (14) days quarantine requirements or process banknotes through Pakistan Council of Scientific and Industrial Research (PCSIR) certified machines in lieu of the fourteen (14) days quarantine.

    The banks procuring such machines shall ensure that the PCSIR certificate specifically mentions the capacity of the machine to disinfect Bacteria and Viruses including the SARS-CoV-2 that causes COVID-19.

  • Foreign exchange reserves dip by $369 million

    Foreign exchange reserves dip by $369 million

    KARACHI: The liquid foreign exchange reserves of the country fell by $369 million to $19.535 billion by week ended September 25, 2020, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves of the country were at $19.904 billion by week ended September 18, 2020.

    The official reserves of the SBP have come down by $342 million to $12.36 billion by week ended September 25, 2020 as compared with $12.702 billion a week ago.

    The central bank attributed the decline to the government external debt payments amounting to $311 million, and other official payments.

    The foreign exchange reserves held by commercial banks fell by $27 million to $7.175 billion by week ended September 25, 2020 as compared with $7.202 billion a week ago.

  • List of customer information to be verified by banks under latest AML regulations

    List of customer information to be verified by banks under latest AML regulations

    KARACHI: The State Bank of Pakistan (SBP) on Wednesday issued the Anti-Money Laundering, Combating the Financing of Terrorism & Counter Proliferation Financing (AML/ CFT/ CPF) Regulations for banks and other financial institutions, which shall supersede previous regulations/instructions.

    Under the new regulations, the SBP issued the list of information, which the banks and financial institutions shall require to verify customer identity.

    List of Information Required for Customer Identity

    A. Basic Identification Information

    1. Full name as per identity document

    2. Mother Maiden name

    3. Date of Birth

    4. Place of Birth

    5. Permanent Address

    6. Identity document number, whichever applicable

    7. Date of expiry of applicable identity document

    B. Other basic information

    8. Father/ spouse name as per identity document

    9. Date of issuance of applicable identity document

    10. Contact Number: Mobile Number (s)/ Land Line Number

    11. Purpose of account/ transaction/ business relation

    12. Beneficial ownership/ controlling rights

    C. Other relevant Information for natural persons, as applicable

    13. Current/ Mailing Address

    14. Personal Email Address (as applicable)

    15. Nationality – Resident/ Non-Resident Status

    16. FATCA/ CRS Declaration, wherever required

    17. Profession/ Source of Income/ Funds: Salary, Business, investment income

    18. Next of Kin

    19. Attested Passport Size Photo (in case of Photo Account instructions)

    20. Live Photo (in case of digital onboarding)

    D. Information for Legal Persons/ Legal Arrangements

    1. Registration/ incorporation number or business registration number (as applicable)

    2. Date of incorporation or registration of legal person or arrangement (as applicable)

    3. Place of incorporation or registration of legal person or arrangement (as applicable)

    4. National Tax Number (NTN)

    5. Nature of business, geographies involved and expected type of counter-parties (as applicable)

    6. Registered or business address

    7. Intended nature of business relations

    8. Purpose of account or transaction (where accounts are not maintained and transactions are done by walk in/ occasional customers)

    9. Type of account/ financial transaction/ financial service

    10. Expected monthly credit turnover (amount and No. of transactions)

    11. Normal or expected modes of transactions/ delivery channels

    12. Wherever instructed/ advised, regulatory limits imposed such as: credit and debits/ deposit and withdrawals/ execution of financial transaction/ types of financial services allowed/ restricted.

    E. Additional Information in case of ”Trusts”

    13. Whether the Trust is a Public Trust or Private Trust including foreign and national trust

    14. Trust Deed whereby the Trust has been created;

    15. Details of Settlor (this will also be available in the Trust Deed);

    16. Objects of the trust (this will also be available in the Trust Deed);

    17. Trustee of the trust (whether trustee is associated person of the settlor);

    18. Description of each class or type of beneficiary (this information may also be checked from Trust Deed);

    19. Details of any possibility of influence of any other person on trustee regarding management and control of trust property;

    20. In the case of “Private Trust” if the beneficiary of a trust is also the beneficial owner of the trust, identification and verification of the beneficiary is required otherwise the name and CNIC of each beneficiary of a trust should be obtained.

  • SBP doubles loan size for setting up hospital to combat COVID

    SBP doubles loan size for setting up hospital to combat COVID

    KARACHI: State Bank of Pakistan (SBP) has enhanced loan size to Rs 1 billion from Rs500 million for setting up new hospital to combat COVID-19.

    The central bank in a notification said that in order to meet financing needs for setting up new hospitals allowed through a notification issued on July 2020, it has been decided to enhance loan size from Rs 500 million to Rs 1 billion per hospital.

    The scheme for setting up of new hospitals will remain valid up till June 30, 2021, as mentioned in Circular Letter No. 16 of 2020.

    The SBP further invited attention to to IH&SMEFD Circular No. 03 and 04 of 2020 read with IH&SMEFD Circular Letter No. 08 and 16 of 2020 and said that the applications approved by Participating Financial Institutions up till September 30, 2020 will be eligible for refinance under the scheme.

    Hence, LCs established under these approved applications will be eligible for refinance even if these LCs are established after September 30, 2020. Details of all these approved cases should be reported in weekly report of RFCC/IRFCC by 1st October, 2020.

  • SBP issues framework for cloud outsourcing arrangements

    SBP issues framework for cloud outsourcing arrangements

    KARACHI: State Bank of Pakistan (SBP) has issued framework for financial institutions outsourcing to cloud service providers (CSPs). The SBP said that to BPRD Circular No. 05 of 2017 on ‘Enterprise Technology Governance and Risk Management Framework for Financial Institutions (FIs)’ and BPRD Circular No. 06 of 2019 on ‘Framework for Risk Management in Outsourcing Arrangements by Financial Institutions’.

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