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040219
STATE BANK OF PAKISTAN - EXCHANGE POLICY DEPARTMENT
F.E. Circular No. 02
February 19, 2004
The Head Offices/Principal Offices of all
Authorized Dealers in Foreign Exchange
Dear Sir/Madam,
Local US Dollar Instruments Collection and Settlement System
With the liberalization of the foreign currency regime in the country, and to facilitate operations for maintaining Foreign Currency Accounts under FE-25, State Bank of Pakistan is pleased to introduce “Local US Dollar Instruments Collection and Settlement System” in Pakistan with effect from March 11, 2004. Presently, the clearing process has to be routed through New York which takes a long time in settlement and the cost of the above process is also quite high for the account holders. The key objectives of this new system are quick settlement locally, cost effectiveness and facilitation of the market.
Scope and Salient Features of “Local US Dollar Instruments Collection and Settlement System”:
Instruments
All financial instruments (cheques, drafts etc.) denominated in US$ drawn on
bank branches (in cities as appear in the coverage list below) in Pakistan will
be acceptable for this settlement system.
Coverage
The bank branches in the following cities will participate in the Local US
Dollar Instruments Collection and Settlement System:
1) Karachi
2) Lahore
3) Islamabad
4) Rawalpindi
5) Faisalabad
6) Multan
7) Sialkot
8) Peshawar
9) Quetta
10) Mirpur
11) Hyderabad
Collection from all other cities will be arranged/managed by each bank, by making internal arrangements, through any one of the above cities.
(Addition of more cities within the ambit of the above settlement system will be considered in due course, depending on the requirements and the facilities for collection of instruments through courier services)
Collection & Settlement Schedule
Initially there will be two collection and settlement days per week, i.e. Monday and Thursday.
If a collection / settlement day happens to be a bank holiday, then it will be skipped till the next collection/ settlement day.
Designated Office
Each bank will designate a branch/Regional/ Head
office in Karachi for presenting outward and receiving inward instruments for
collection and settlement through M/s National Institutional Facilitation
Technologies (Pvt.) Ltd. (NIFT).
NIFT will deal with only one designated office of each bank in Karachi for settlement of Karachi and upcountry branches.
Each bank may also designate one branch in each city (i.e. from the coverage list) with whom NIFT and the designated branch of that bank in Karachi, if required, would liaise for issues regarding collection & settlement relating to other branches in that city.
Mandatory Settlement
It will be mandatory for the banks operating in
Pakistan, whose Head Offices or branch offices are located in Karachi:
-- To be a member of this system.
-- To open US$ settlement account with a minimum balance of US$ 10,000/- for
settlement with SBP BSC(Bank) Karachi and thereafter to maintain sufficient
balance to cater to the requirements keeping in view their business volume. The
said account will be remunerated on the same interest rate as for SCRR for
FE-25.
-- To settle payment of US$ instruments drawn on them through this system or to
return unpaid instruments on settlement date.
In case the paying bank does not return the original instrument on the
settlement date to the presenting bank, it will be assumed that the instrument
has been accepted for payment and will be settled through this system
accordingly.
Processing Cycle
The collection/settlement will be centralized at
Karachi. NIFT will interface with one designated branch of each bank in Karachi
only.
Banks will route all inward/outward instruments from their branches in Pakistan through their designated branch in Karachi.
NIFT will collect/deliver all instruments for inward/outward settlement from the designated branches of Banks in Karachi, process the collection/settlement and deliver a consolidated statement to the respective designated branch of the bank.
Each designated branch in Karachi will forward the instruments received in inward collection to the payee branch of their bank directly for ‘Acceptance’ or ‘Return unpaid’.
The payee branch will settle or return the original instrument, if any, to the designated branch in Karachi. NIFT will collect all return instruments from the designated branches in Karachi, process them alongwith inward collection and then route them to the related designated presenting Bank branch in Karachi.
The Settlement proceeds of the instruments would be communicated to the concerned branch immediately by electronic or any other means on the same day for crediting to the concerned depositor’s account.
Date Stamp
The Collecting Bank will affix the stamp of the date
on which outward instruments would be sent to NIFT for collection.
Settlement
The net settlement will take place by debiting or crediting the respective
banks’ US Dollar clearing accounts on settlement date.
Settlement Statements
NIFT will provide a statement of collection / settlement statistics on monthly
basis to ascertain the expenses payable by the lodging bank to paying bank at
the rate of Rs. 100/- per instrument (for cheques drawn on cities other than
Karachi) irrespective of whether the instruments are paid or return unpaid.
All other reports and information will be produced and provided on the existing
pattern as for rupee clearing.
NIFT will provide stationery and usual collection / settlement preparation material to the branches as is being done for PKR clearing systems.
Forced Retention
If for some unavoidable reasons the relevant bank is
unable to provide a returned cheque on the specific collection/settlement date
due to any reason beyond control, the designated bank office in Karachi will
provide to the concerned bank alongwith inward clearing instruments, with a copy
to NIFT, a document on prescribed format (agreed between the banks and NIFT)
giving details of the instrument, undertaking that the said instrument will be
provided to the lodging bank directly on availability but not later than the
subsequent collection / settlement date, that instrument will be considered as
returned unpaid.
This process may function in a manner such that the designated bank will furnish the prescribed document in duplicate to NIFT in place of the returned document and NIFT will send the first copy to the lodging bank along with other returns, if any, as a return instrument.
Settlement In Case Of Insufficient
Balances
At any point in time when the net debit (inward &
outward) cannot be paid out of a bank’s US Dollar clearing account (due to
insufficient balance) held with SBP BSC(Bank), Karachi, the State Bank reserves
the right to adopt a suitable alternate. This will primarily take the shape of
payment through an appropriate overnight SWAP from the Pak Rupees clearing
account balance of the bank with SBP to the extent of such shortfall in US
Dollar account.
SWAP Limit for every Bank is being advised to each bank individually.
Settlement Charges
NIFT will charge the presenting bank Rs.100/- per instrument for its services
and Rs.100/- for processing a return instrument.
Yours faithfully,
(M. R. MEHKARI)
Director
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