Purchase of forex by individuals: SBP fixes $100,000 per person per year maximum limit

KARACHI: The State Bank Pakistan (SBP) has fixed a maximum limit of $100,000 (or equivalent in other foreign currencies) per person per calendar year for buying of foreign currency from Exchange Companies.

For this purpose, SBP has asked the Exchange Companies to obtain an undertaking from individual customer at the time of each sale transaction exceeding $ 1,000/- (or equivalent in other currencies) that they have not already reached the limit of USD 100,000/- per calendar year or USD 10,000/- per day from all exchange companies and these limits will not be breached after the current transaction.

In order to enhance documentation and transparency and to further strengthen the foreign exchange regulatory regime, the State Bank on Sunday amended the regulations, governing sale of foreign exchange to individuals by exchange companies.

According to the State Bank, this step, which is in continuation of other measures being taken by SBP, is primarily to discourage speculative buying and selling of foreign exchange from the exchange companies without affecting the ability of the market to serve the genuine needs of the public.

Consequent to these amendments, exchange companies will ensure that any individual shall not purchase foreign exchange from all exchange companies in excess of USD 10,000 per day and USD 100,000 (or equivalent in other currencies) per calendar year, in the form of cash or outward remittances. These limits have been set taking into consideration the individual’s personal needs for foreign exchange.

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In addition, the individuals shall continue to avail the facility of remitting the educational and medical expenses abroad up to USD 70,000 per calendar year and USD 50,000 per invoice respectively, from banks as per existing regulations.

For remittance of any amount in excess of these limits, or for any other purposes, individuals can approach Foreign Exchange Operations Department of SBP-BSC, through their bank. Further, there is no change in regulations with respect to foreign currency accounts of the individuals.

As per fresh directives, the exchange companies will obtain supporting documents against sale of foreign exchange in excess of USD 1,000 (or equivalent in other currencies) substantiating the purpose of the transaction. Further, exchange companies will not perform transactions against authority letters.

Instructions further emphasized that ECs shall perform transactions only at authorized outlets of the company and shall not provide delivery services to the customers. Exchange Companies and Exchange Companies of ‘B’ category will not conduct any transaction with their customers on an authority letter.

Further, it is also reemphasized that Exchange Companies and Exchange Companies of ‘B’ category shall perform transactions only from authorized outlets of the company and shall not provide delivery services to the customers. For all foreign currency sale transactions equivalent to USD 500/- or above Exchange Companies will retain copies of identification documents i.e., Computerized National Identity Card (CNIC) /National Identity Card for Overseas Pakistanis (NICOP)/ Pakistan Origin Card (POC) / Passport (having valid visa on it or any other proof of legal stay of a foreigner in Pakistan) after having seen the document in original.

In addition, Exchange Companies will also carry out biometric verification of Pakistani Nationals for all such transactions and maintain the record thereof. Exchange Companies will also obtain supporting documents related to the purpose of FCY sale transactions, exceeding USD 1,000 or equivalent in other currencies.

According to SBP, these instructions will be applicable with immediate effect. However, for implementing the requirements for annual ceiling of purchase of foreign exchange (FCY cash and outward remittances) by individuals, the purchases made during the remaining days of December 2021, will be counted towards the annual limit for calendar year 2022.

SBP has warned that failure to comply with these instructions shall attract regulatory action under the relevant provisions of the Foreign Exchange Regulation Act, 1947.

Copyright Business Recorder, 2021