State Bank of Pakistan (SBP) on Friday slapped a ban on new franchises/third party network of Exchange Companies. The SBP also asked exchange companies for a strict monitoring of existing franchise/third party network to ensure that they are not involved in any illegal activity.
The SBP in its EPD Circular Letter No 10 of 2014 issued on Friday, invited attention of the exchange companies to FE Circular No 3 dated June 03, 2013 in terms of which instructions for establishment of new branches, franchises, payment booths and currency exchange booths of the exchange companies were issued.
According to the circular, the SBP has decided that requests of the exchange companies received under their respective Annual Network Expansion Plans (ANEP) for the calendar year 2015 for opening of new franchises or any third party network shall not be considered till further instructions.
In the meantime, the SBP has directed exchange companies to thoroughly review their existing franchise/third party network to ensure that they are not involved in any illegal activity or associated with any of the proscribed entities/individuals. "Exchange companies are also advised to strengthen their monitoring mechanism for their franchise/third party network to ensure their meticulous compliance with the applicable rules and regulations," the circular said. The SBP asked exchange companies to bring the new guidelines to the notice of all constituents.
Sources said in the light of this circular, the SBP will not issue NOCs for new franchises or any third party network of exchange companies, however, there will be no restrictions on opening of new branches and exchange companies can apply for branches as per their ANEP.
They said monitoring and action against branches of a exchange company is easier, in case of any irregularity or non-compliance of SBP's rules and regulations, compared to franchises or any other third party network, therefore SBP is making efforts to promote ECs network through opening of new branches, which entire responsibility will be on exchange company.
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