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STATE BANK OF PAKISTAN EXCHANGE POLICY DEPARTMENT KARACHI
F. E. Circular No. 14
October
3, 2002
All Authorised Dealers
in Foreign Exchange
Payment Of Royalty/Franchise & Technical Fee Or Commission/Service Charges In Financial Sector
Attention of all Authorised Dealers is invited to Para 10, Chapter XIV of
the Foreign Exchange Manual containing the definition and procedure for
payment of Royalty and Technical Fee in the Manufacturing sector or Service
Charges in Agriculture, Social, Infrastructure and Service Sectors.
It has now been decided that remittance of Royalty/Franchise and Technical Fee
or Service Charges may also be allowed in Financial Sector. Accordingly Para 10
of Chapter XIV of Foreign Exchange Manual is amended as under:
The
following Para may be inserted in Chapter XIV after Para 10(ii) and the
existing Para 10 (iii), (iv) and (v) may be amended to read as 10(iv), (v)
and (vi) respectively:
“Para
10(iii)
The remittance of Royalty/Franchise and Technical Fee or Commission/Service
Charges for the financial sector may be allowed on the following guidelines:
a) The applications for remittances of such payments by the Commercial
Banks as well as Non-Banking Financial Institutes (NBFIs) including leasing/modaraba
companies and investment banks, to the foreign collaborators in respect of
their branded financial products/services within the area of their
authorized business, would be processed and approved by the State Bank of
Pakistan, on a case to case basis, on submission of an attested copy of the
agreement and other relevant information/documents.
b) The one time lump sum upfront Royalty/Technical Fee/Franchise Fee
should not exceed US$500,000/-. This would be allowed from the interbank
market.
c) Continuing royalty payments, service/technical charges/commission or
handling charges/any other directly related charges not exceeding 0.25% in
aggregate of customers’ billing net of taxes/surcharges would be allowed
which would either be recovered from the customers or met through the
financial institution’s own resources. No foreign exchange would be
provided/utilized for this purpose from the interbank market.
d) Permission for standby LC/guarantee, if required, would be granted on
the merit of each case.”
Yours
faithfully,
(M. R. MEHKARI)
Director
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