ISLAMABAD: Pakistan’s central bank has directed exchange companies to conduct foreign currency transactions of $2,000 or above against the rupee via banking channels, in a bid to document foreign exchange transactions.
The State Bank of Pakistan (SBP) said in a circular issued on Friday that its directives were meant to enhance transparency and promote documentation of foreign exchange transactions.
“State Bank of Pakistan has advised the Exchange Companies that all foreign currency sale transactions of USD 2,000/- or above (equivalent in other currencies) against PKR should only be conducted through payment modes, such as bank transfer/cheques from the personal bank account of the customer,” the SBP said.
Exchange companies were directed to ensure the transaction receipt should contain necessary information related to transactions. This includes the transaction, instrument reference, name of the bank transferring the funds and the bank issuing the funds.
The SBP directed exchange companies to ensure transaction receipts contain the customer’s identification document number as well.
“This step is also focused on encouraging the general public to use various banking channels, which are generally more secure, to fulfil their genuine foreign exchange needs,” the central bank said.
The state bank warned exchange companies of “regulatory action” in case they failed to comply with the instructions. It said action would be taken under relevant provisions of the Foreign Exchange Regulation Act, 1947.
Malik Bostan, chairman of the Forex Association of Pakistan, appreciated the move. He said it would help Pakistan’s government document its economy and discourage people from investing in US dollars.
“The government wants to discourage buying of US dollars and investment in the greenback through the initiative,” he told Arab News. “People have started buying dollars in bulk after fears of debt default soared recently.”
Bostan advised people to invest in Pakistan’s currency and use banking channels for travel, education and medical expenses. He said the move would strengthen the rupee against the US dollar.
He urged the SBP and other financial institutions to conduct strict monitoring of online transactions through credit cards, adding that their increasing use was contributing to the deprecation of Pakistan’s reserves.
“The government should have a strict monitoring of online trading through credit and debit cards to control the outflow of the US dollar,” he said.
He added more than 50 million Pakistanis were using debit and credit cards for online trading without any regulatory control.