Non-Resident Pakistanis: SBP to introduce rupee value account for investment

KARACHI: In order to facilitate Non-Resident Pakistani (NRPs) for investment in Pakistan, the State Bank of Pakistan (SBP) has decided to introduce a separate category of PKR Account named "NRP Rupee Value Account (NRVA)".

Chapter 8 of the Foreign Exchange Manual provides general instructions regarding opening and maintenance of Non-resident Rupee Accounts, Repatriable and/or Non-repatriable with ADs in Pakistan. The definition of resident and non-resident person/entity given in Para 1, Chapter 8 of FE Manual has been amended to align it with the definition prescribed in Income Tax Law.

"In order to facilitate Non-Resident Pakistani (NRPs), to open and operate non-resident PKR account through digital means and to invest in shares quoted on the Stock Exchange(s) in Pakistan, residential & commercial real estate, Government of Pakistan debt securities and term/ remunerative deposit products of ADs on repatriable basis, it has been decided to introduce a separate category of PKR Account named NRP Rupee Value Account (NRVA)", the State Bank announced on Thursday.

For this purpose, Para 1-Introduction of Chapter 8 of FE Manual has been replaced and as per amendment accounts of individuals, firms or companies resident outside Pakistan are designated as non-resident accounts.

The resident and non-resident individual and entity, will have the same meaning as ascribed to them in the applicable Income Tax law/regulation except for an employee or official of the Federal Government or a Provincial Government posted abroad in the tax year, who will be treated as non-resident under these regulations.

Now ADs may open and maintain the non-resident rupee accounts of three categories including Non-resident Rupee Account-Repatriable (NRAR), Non-resident Rupee Account-Non-repatriable (NRAN) and NRP Rupee Value Account (NRVA) for Non-resident Pakistanis only.

ADs may allow opening and maintenance of these accounts in compliance with applicable regulations, including the Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) regulations, and their own policies and procedures.

ADs may also collect all documents related to account opening through their overseas branches, representative offices or banking subsidiaries abroad.

In this respect, the ADs should ensure that the account opening forms etc. and trained staff are available at aforesaid branches, representative offices or subsidiaries abroad.

The overseas branch, representative office or banking subsidiary, after fulfilling account opening formalities, will forward related documents electronically to the head office/designated branch of the AD in Pakistan for further processing.

In view of the account holders being non-residents, ADs are encouraged to make necessary arrangements in their systems and procedure to allow opening and maintenance of these accounts through digital channels.

For operations in NRP Rupee Value Account (NRVA), ADs may open 'NRP Rupee Value Account' of non-resident Pakistani individuals only, in addition to other non-resident rupee accounts categories.

ADs will enable operations in the account through the digital channels e.g. internet/mobile banking, ATM/ Debit cards, besides the conventional modes in practice. The ADs may also issue cheque book to the account holder, if required. ADs may issue supplementary ATM/Debit cards as per applicable laws /regulations and banking practices.

In case debit cards are used outside Pakistan, settlement there against will be made by the AD through interbank.

ADs may allow non-resident Pakistanis to open the account jointly with other residents/non-residents, as per applicable laws/banking practices. These accounts should, however, be treated as non-resident accounts.

In case the account becomes dormant due to non-operation, ADs will devise a mechanism to reactivate the account digitally, in compliance with the applicable regulations.

Under this account category, account holder can receive remittances from abroad through banking channels and can transfer of funds from account holders' own Foreign Currency Value Account (FCVA) and other NRP Rupee Value Account (NRVA) with the same AD.

Proceeds from disinvestment/sale/maturity of Government of Pakistan's debt securities, residential and commercial real estate, quoted shares, term deposits, and profit/rent/dividend/ /interest on such securities/ properties/ shares/ deposits received on account of investments will be allowed.

Investments in Registered Debt securities of Government of Pakistan (T-bills, PIBs, Sukuk and any other registered debt securities, shares quoted on the stock exchange(s) in Pakistan, residential and commercial real estate and term /remunerative deposit products of the AD maintaining the account will be permitted.

Copyright Business Recorder, 2020