20000119

Banks' allowed to remit forex

RECORDER REPORT

KARACHI: The State Bank of Pakistan (SBP) has restored the powers of the authorised dealers (banks) to remit foreign exchange in various forms without its approval.

In a circular issued by the SBP on Tuesday, addressing the authorised dealers, it has permitted them to register contracts, purchase orders, proforma invoices, indents, etc., for imports without letter of credit.

The SBP had withdrawn the facility to remit foreign exchange through circulars issued on July 8 and July 13, 1998.

"The position has since been reviewed and the powers withdrawn in terms of the said circulars, are restored with immediate effect," said the SBP new circular.

Following nature of remittances are allowed under the fresh instructions:

a) Remittance on account of principal, interest, etc., on the basis of repayment schedules registered with the SBP of purely private sector excluding those organisations which are 51 percent or more owned by the government.

b) Remittances on account of royalty and technical fee.

c) Remittances of dividend to non-resident shareholders on the basis of documentation prescribed by the SBP.

d) Remittances of installments of principal and interest of foreign currency loans by Pakistani firms and companies on the basis of repayment schedule registered with the SBP and remittances of principal and interest on account of foreign currency loans obtained by foreign-controlled companies for working capital requirements in terms of repayment schedule communicated to the SBP.

The authorised dealers were permitted to register contracts, purchase orders, proforma invoices, indent, etc. for imports without letter of credit, provided the import of the concerned goods was not subject to specific authorisation from the Export Promotion Bureau/Ministry of Commerce.

This facility was withdrawn in July 1998. "It has been decided to restore the said facility with immediate effect, subject to the condition that such imports will be made of only those commodities which do not require specific authorisation from the Export Promotion Bureau or the Ministry of Commerce and which are not subject to the margin restriction imposed by our Banking Policy and Regulation Department," said the circular.

The traders and industrialists widely welcomed the move with the hope that the relaxation in remittances will help improve the confidence of the local as well foreign investors.

It was viewed by the multinational companies that they could now easily borrow from the international institutions as it has become possible to remit the due money on borrowing.

The new government has already announced to make all payments due in terms of foreign exchange.

The State Bank has paid $38 million in the first week of January 2000.

Karachi Stock Exchange Chairman, Arif Habib while welcoming the move suggested that the remittances of sales proceeds should also be allowed.

This will produce great positive impact on the stocks business and boost the confidence of the foreign investors.

A committee comprising representative of the State Bank, stocks exchange, custodian banks and Central Depository Company, will review the possibility of remitting sales proceeds without taking prior permission from the State Bank, next week.