| |
|
 |
| For business information, annual reports, laws, ordinances, regulations and articles. |
|
|
|
CHAPTER VI
PRIVATE FOREIGN CURRENCY ACCOUNTS
Ref F.E. Cir. No. 28 dated 27th
December, 2000
Ref. F.E. Cir No. 6 dated 15th June, 2000
Ref. F.E. Cir. No. 2 dated 24th February, 2000
Ref. F.E. Cir No. 16 dated 24th June 1999
Ref
F.E. Cir No. 12 dated 29th May, 1998
Ref. F.E. Cir. No. 17 dated 06th June, 1998
Ref. F.E. Cir. No. 25 dated 20th June, 1998
Ref F.E. Cir. No. 42
dated 21st July, 1998
1. Opening of Foreign Currency Accounts with Banks in
Pakistan:-
(a) Authorised Dealers may, without the prior approval of the State Bank, open with
them foreign currency accounts of Pakistan Nationals resident in or outside Pakistan
including those having a dual nationality. These accounts can also be opened in the joint
names of residents and non-residents. Resident firms and resident companies [ ] and the companies
incorporated in Pakistan with foreign share-holdings are also eligible to open and
maintain foreign currency accounts in Pakistan. Charitable Trusts, Foundations etc. which
are exempt from payment of income tax can also open foreign currency accounts in Pakistan.
The facility is also available to [--], all foreign nationals
residing abroad, all foreign firms/corporations other than banks incorporated and
operating abroad provided these are owned by persons who are otherwise eligible to open
foreign currency accounts. For example, since banks operating abroad are not eligible to
open such accounts, financial institutions etc. owned by banks, cannot also maintain
accounts under Foreign Currency Accounts Scheme. Foreign nationals residing in Pakistan
and foreign firms and companies registered abroad and operating in Pakistan can also open
and maintain foreign currency accounts with the Authorised Dealers provided the foreign
exchange credited to such accounts does not represent their earnings abroad in respect of
business conducted in Pakistan, or services rendered by such foreign nationals and
firms/companies while in Pakistan.
(b) Opening of Foreign Currency Accounts by the firms/companies/contractors etc. which are
to be fed through the funds of foreign equity/ foreign currency loans raised for
establishment of industrial and other projects/payments in foreign exchange to be received
by the contractors from the employers for meeting foreign currency component of the
contracts would require prior approval of the State Bank as per procedure laid down in
paragraph 5 of this Chapter.
(c) The accounts covered by item (a) above are subject to the following term and
conditions:-
(i) These accounts can be fed by remittances received from abroad, travelers cheques
(whether issued in or outside Pakistan; or whether in the name of account-holder or in the
name of any other person), foreign currency notes and foreign exchange generated by
encashment of Foreign Exchange Bearer Certificates, U.S. Dollar Bearer Certificates and
Five Year Foreign Currency Bearer Certificates.
(ii) Foreign exchange released from Pakistan for any purpose and foreign exchange
representing sale proceeds of goods exported from Pakistan, earnings of the residents on
account of services, earnings/profits of the overseas offices/branches of Pakistani
firms/companies and banks etc. will not be eligible for credit to such accounts and the
residents will be subject or the existing legal requirements of surrender of such funds to
an Authorised Dealer within the prescribed time limit as detailed in paragraph 9 of this
Chapter.
(iii) Authorised Dealers will fix their own rates of interest for Term Deposits of 3
months, 6 months, 12 months, 2 years and 3 years provided they do not exceed the
Euro-Dollar Deposit Bid rates of Barclays Bank, London at the close of business on the
previous working day plus the margins prescribed by the State Bank from time to time. The
Barclays Bank Bid rates and the maximum rates for payment of interest including the
margins allowed by the State Bank, are published daily by the Foreign Exchange Rates
Committee. Interest on the Term Deposits of 2 years and 3 years will be paid on yearly
basis.
(iv) As regards foreign currency deposits of less than 3 months including Call Deposits,
Savings Bank, Special Notice etc. Accounts, Authorised Dealers shall pay interest on the
basis of return last allowed on similar Rupee PLS Accounts provided the rate at which
interest is paid does not exceed the interest rate applicable to 3 months Term Deposits. [ ] For fixing the rates
for payment of interest on £ Stg./D.M./J.Yen deposits, the procedure as laid down above
for U.S. Dollar deposits will be adopted.
(v) These accounts are free from all Exchange Control restrictions. In other words,
account holders have full freedom to operate on their accounts to the extent of the
balance available in the accounts either for focal payments in Rupees or for remittance to
any country and for any purpose or for drawls in the shape of foreign currency notes and
travellers cheques.
(vi) The balances held in foreign currency accounts and income there from are exempt from
the levy of Wealth Tax and Income Tax and compulsory deduction of Zakat at source.
(vii) Accounts can be maintained and payments made in any currency of choice of the
account holder. Credit Card facility can be obtained by the account holders to the extent
of the balances held in their respective accounts, for utilization in and outside Pakistan
provided settlement of the bills in respect of expenditure within the country is made in
Rupees only and the relevant foreign currency amount is taken by the Authorised Dealers in
their daily position. Authorised Dealers can also grant rupee loans to the account-holders
and issue guarantees in favour of residents/non-residents on behalf of the
account-holders.
(viii) Authorised Dealers can mark lien on the foreign currency accounts in respect of
banking facilities like Credit Cards, Bank Guarantees and loan/credit etc. availed of by
the account holders in and outside Pakistan. The aggregate amount of the facilities
availed of in and outside Pakistan should not however, exceed the balance in the
respect-ive accounts at any point of time and the instructions on credit control are
strictly followed.
(ix) Authorised Dealers shall sell all the deposits in foreign currency accounts to the
State Bank in multiples of US$ 1,000/-, £ Stg. 1,000/-, DM 1,000/- and J.Yen 250,000/-.
State Bank shall cover exchange risk of all such deposits as well as interest accruing
thereon at the option of the Authorised Dealers subject to payment of fee at the time of
taking the forward cover at the rate(s) prescribed by the State Bank from time to time.
Fee is payable on the full amount of forward cover obtained notwithstanding whether it is
in respect of the amount of deposit or for both the amount of deposit and interest. In
case of premature withdrawal of deposit, fee for the unexpired period is refundable.
(x) Head Offices of Authorised Dealers will send to the Policy Division of the Foreign
Exchange Department, State Bank of Pakistan, Central Directorate, Karachi such returns in
respect of these foreign currency accounts as may be prescribed by the State Bank from
time to time.
(xi) A separate ledger will be maintained by the Authorised Dealers for these foreign
currency accounts.
2. Acceptance of Deposits from foreign banks operating abroad and overseas
branches :-
As an exception to the rule set out in Paragraph 1 above, Authorised Dealers can
accept foreign currency deposits of a minimum amount of US$ 5 million (or equivalent in
other currencies) from their overseas branches and foreign banks operating abroad,
including financial institutions owned by them, provided the period of maturity thereof is
not less than six months. Interest on these foreign currency deposits can be paid by the
Authorised Dealers in either of the manners indicated below in accordance with the option
exercised by the depositor in writing at the time of placement of deposits:
(i) On completion of a period of one year. In this case, interest can be paid at the rate
not exceeding by 1/4% the 12 months Euro-Dollar Deposit bid rate of Barclays Bank, London
at the close of business on the working day immediately preceding the date of deposit as
published by the Foreign Exchange Rates Committee.
(ii) Every quarter or half year. In this case, interest can be paid at the rate not
exceeding by 1/4% the 3/6 months (as the case may be) Euro-Dollar Deposit bid rate of
Barclays Bank, London at the close of business on the working day immediately preceding
the 1st day of the quarter or half year for which interest is paid, as published by the
Foreign Exchange Rates Committee.
3. Payment of subsidy on account of interest differential :-
(a) As for surrender of the amounts of deposits IO State Bank, instruct-ions
contained in pare I(c)ix above shall apply. Where the interest paid on foreign currency
Term Deposits of 3, 6 and 12 months on the basis of Barclays Bank's bid rates as
prescribed in paragraph 1 above exceeds the return last allowed on similar Rupee PLS
Accounts, State Bank shall reimburse the amount of differential on account of the excess
to the Authorised Dealers. For the purpose of claiming reimbursement of the differential,
Authorised Dealers should furnish to the Chief Managers' Offices of the State Bank,
details of individual foreign currency Term Deposits in the prescribed form (Appendix V-6)
while surrendering the amount of foreign exchange to the State Bank. This statement will
be submitted in triplicate and bear running serial number. After the interest has been
paid, claim for payment of interest differential will be lodged by the Authorised Dealers
with the Chief Managers' Offices of the State Bank in the form given at Appendix V-7.
4. General permission for Maintenance of Accounts by Resident Pakistanis:-
Pakistan nationals resident in Pakistan are not permitted to open or maintain any
foreign currency accounts with banks etc., outside Pakistan. As an exception, they can
maintain foreign currency accounts abroad in any country other than Afghanistan,
Bangladesh, India and Israel provided the amount does not exceed in the U.S.$ 1000/- or
equivalent thereof in other currencies as provided for in Government Notification No. SRO
1016(1)79 dated the 17th October, 1979. These accounts cannot, however, be operated from
Pakistan without the prior approval of the State Bank.
5. Special permission for Foreign Currency Accounts Resident Pakistanis:-
In very special cases, permission may be granted by the State Bank on individual
applications and merit to firms/ companies/contractors for opening and/or maintaining
foreign currency accounts with banks in Pakistan for keeping therein the amounts of
equity/foreign currency loans raised for establishment of industrial and other
projects/payments received in foreign exchange by the contractors from their employers for
meeting foreign currency component of the contract pending utilisation of these funds for
approved purposes. For this purpose application may be made to the State Bank through an
Authorised Dealer stating the purpose for which the account is proposed to be opened or
maintained in foreign currency, the sources from which the account will be funded and
other relevant information. The maintenance of these special Foreign Currency Accounts
will be subject to the terms and conditions as may be specified by the State Bank in the
relative permission letter, which would, inter-alia, include the following:
(i) The accounts will be kept outside the scope of Foreign Currency Accounts Scheme.
(ii) The bank with whom account is opened shall maintain only a "Proforma
Account" in its local books and actual amount will be held outside Pakistan (Cover
Account). The amount of deposit will not thus be reflected in the local books of the bank.
(iii) Interest earned abroad on the balance held in the account will be converted and paid
into Pak. Rupees.
(iv) The exemption of interest income from levy of taxes etc. shall not be available to
this account.
(v) The facility of forward cover from State Bank of Pakistan will not be admissible.
(vi) The balance remaining in the account on completion of the Contract/ Project will be
converted into Pak. Rupees.
(vii) All details representing payments outside Pakistan will be put through the
"Cover Account" and the corresponding debit entries will be made in the
"Proforma Account" for the benefit of the account holder and submission of
periodical statements to the Control.
(viii) In case of conversion of foreign currency balances into Pak Rupees the required
foreign currency amount will be debited to the relative "Cover Account" and credited
to the regular foreign currency account of the bank concerned. The bank concerned will
make rupee payments against the relative foreign currency receipts and will report the
amount involved on Schedule 'J' as inward remittance in the monthly Foreign Exchange
Returns under the head "Private Transfers n.e.s." under Code No.9617.
Simultaneously, the foreign currency amount in question will be entered to the debit of
the respective "Proforma Account".
Ref. Cir. No. 16 dated 17th May, 1996
6. Reporting of receipts into and payments from foreign currency
accounts :-
Receipt of foreign currency amounts for credit to the foreign currency accounts should
be reported by the Authorised Delaers as "Purchase" on Schedule 'J' under Code
9718 in the case of accounts opened in terms of para 1 above and under Code 9828 in
respect of accounts opened under special permission granted by the State Bank in
accordance with the provisions of paragraph 5 above. Similarly payments out of the foreign
currency accounts should be reported by the Authorised Dealers as "Sale" on
Schedule E- 4 under Code 1718 in the former case and under Code 1828 in the later case.
7. Reporting of local disbursements from the foreign currency accounts :-
Authorised Dealers should report the payments in Rupees from the foreign currency
accounts as "Sale" on Schedule E-4 under Code 1718 or 1828, as the case may be.
The Rupee receipts should simultaneously be reported as "Purchase" on relevant
schedules under a code appropriate to the purpose of the receipt.
8. Payment of interest on Foreign Currency Accounts :-
Interest paid by Authorised Dealers on Foreign Currency Accounts should be reported as
"Sale" on Schedule E-4 of the monthly foreign exchange returns under Code 1226.
9. Surrender of Foreign Exchange :-
In exercise of the powers conferred by Section 9 of the Act, the Federal
Government have issued Notification No. SRO 1016(1)79 dated the 17th October,
1979 (Appendix II-8) requiring all citizens of Pakistan and other persons residing in
Pakistan continuously for six months or more, who become the owner of any foreign exchange
whether held in Pakistan or abroad, to sell such foreign exchange to an Authorised Dealer
within three months of the date of acquisition by them of such foreign exchange. The
provisions of the aforesaid notification do not apply to the following cases viz:-
(i) Foreign exchange held abroad by foreign diplomates and foreign nationals employed in
Embassies and Missions of foreign countries in Pakistan.
(ii) Foreign exchange held abroad by foreign nationals or foreign business houses, except
to the extent that it represents their earnings abroad in respect of business conducted in
Pakistan or services rendered while in Pakistan.
(iii) Foreign exchange held by residents in Pakistan in countries other than Afghanistan,
Bangladesh, India and Israel provided the amount does not exceed in the aggregate U.S.
$1000/- or equivalent thereof in other currencies.
(iv) Afghan currency whether held in or outside Pakistan.
For the purposes of the aforesaid notification the term "residents in Pakistan"
excludes citizens of Pakistan in foreign countries so long as they stay outside Pakistan,
but includes foreign nationals who reside continuously in Pakistan for six months or more.
10. Foreign Currency Accounts of Foreign Nationals :-
Foreign nationals resident in Pakistan other than persons of Indo-Pakistan origin
holding dual nationality can open and/or maintain foreign currency accounts with banks in
or outside Pakistan. They can also operate on these accounts from Pakistan under the
general permission granted by the State Bank vice Notification No.74/59-SB dated the 25th
February, 1959 issued pursuant to sub-section 1 of Section 4 of the Act.
11. Payments by Foreign Nationals in Foreign Currencies :-
Payments in foreign currency by foreign nationals residing in Pakistan to or on behalf
of residents of Pakistan whether Pakistanis or foreign nationals are prohibited. Foreign
nationals should not, therefore, directly or indirectly, make foreign currency available
to the residents or to other persons on their behalf against payment in Rupees. Such
payments are prohibited even from their foreign currency accounts which they are permitted
to maintain and operate from Pakistan.
12. Foreign Exchange received by Residents in Pakistan :-
Payments in foreign exchange received by an Authorised Dealer on behalf of a resident
in Pakistan must not be retained in foreign exchange but must be converted into Rupees
unless the Authorised Dealer is shown an authority from the State Bank to the effect that
the payee is authorised to retain the foreign exchange received by him.
|
|
|
|
|
|
| Home | About Us | Contact | Information Resources |