SBP issues clarification on new forex rules

KARACHI: The State Bank of Pakistan on Sunday issued a clarification about the rules pertaining to foreign currency accounts released on October 6.

The Ministry of Finance on Oct 6 had banned individuals from depositing foreign exchange into bank accounts if the forex has been purchased from the open market.

The SBP in a statement clarified that there has been no change in the general or special permissions given by 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 the Government of Pakistan,” said the SBP statement.

Can FCY account still be credited with FCY purchased from Exchange Companies?

Regarding whether money obtained from foreign currency exchanges can be deposited into foreign currency accounts, SBP 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 State Bank through any general or special permission under any law”.

Will it become difficult for me to send money for education fee of my children?

The SBP stated: “Nothing has changed on this front. As per current practice, money for education fee of children can be sent through an individual’s Pak Rupee as well as foreign currency account.”

How will remittances for medical treatment be made?

“As per current practice, a bank, on receipt of an application from its customer along with invoice of the hospital/clinic/ necessary documents, will debit the customer’s Account and remit the funds to the hospital/clinic abroad,” the SBP clarified.

Are any measures being considered for freelancers/IT exporters?

The SBP said that entities engaged in exports of IT services can open special foreign currency accounts under the existing regulations and can retain up to 35% of their export proceeds for their foreign exchange needs like payment of commission/discount to the overseas agents/buyers, meeting expenses such as promotional publicity, import of Hardware/Software, foreign consultant’s fee etc.

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“In order to facilitate freelancers, State Bank has opened up Pakistan Remittance Initiative channels for them to conveniently receive proceeds of their services. Freelancers receiving remittances using this channel are also allowed to repatriate up to 35% of the export earnings through their PKR denominated bank account in Pakistan for outward remittances,” it added.

Moreover, freelancers that are engaged in export of their services and receive payment in foreign currency can open special FCY retention accounts and retain up to 35% of proceeds from export of services received in foreign currency.