No Change in Instruction on Purchase of Foreign Currency Notes by Banks: SBP

July 22, 2019 (MLN): The State Bank of Pakistan (SBP) has issued a clarification regarding the revised chapter 11 of the Foreign Exchange (FE) Manual, includes regulations on ‘Dealings in Foreign Currency Notes and Coins etc'.

According to a press release by the SBP, there are some confusions/ misinterpretations regarding Para 2 suggesting that SBP has allowed the banks to sale/ purchase foreign currencies to/from public by amending the existing regulations.

The Statement by the SBP read “One of these revised chapters, 11, includes regulations on ‘Dealings in Foreign Currency Notes and Coins etc. by the Authorized Dealers (banks). With respect to revised Chapter 11, it has come to our notice that there are some confusions/ misinterpretations regarding Para 2 suggesting that SBP has allowed the banks to sale/ purchase foreign currencies to/from public by amending the existing regulations. In this regard, it is clarified that no such amendment has been made. It would be pertinent to mention here that even before the recent revision in Chapter 11, “every authorized branch is permitted to deal in foreign currency notes, coins, deposits, credits, drafts, traveler’s cheques, letters of credit and bills of exchange, expressed or drawn in Pakistan currency but payable in any foreign currency.” {(Para 2(iii), Chapter 2 of Foreign Exchange Manual}. Since Chapter 11 of the FE Manual specifically governs regulations regarding dealings in foreign currency notes and coins etc. by the authorized dealers, therefore, the instructions related to sale/purchase of foreign currency notes have been added in Chapter 11 with emphasis on Authorized Dealers regarding compliance with AML/CFT regulations.”

The Central Bank added “the existing instructions issued by SBP vide Notification No. F.E.1/2012-SB dated the 16th June, 2012 regarding currency declaration to the Customs authorities by the inbound travelers on amount exceeding US$ 10,000, or equivalent in other currencies, have also been incorporated in revised Chapter 11.”