State Bank of Pakistan (SBP) has said that a limit of US $10,000 or equivalent in other currencies for individuals to carry physically or otherwise within Pakistan was proposed in the Foreign Exchange Regulation (Amendment) Bill on the suggestion of the National Assembly's Finance Committee. This was stated by the Deputy Governor SBP Jamil Ahmed during the meeting of the finance committee chaired by Asad Umar that approved Foreign Exchange Regulation (Amendment) Bill to check the practice of Hawala/Hundi and other forms of illegal foreign exchange transactions. The meeting was told that the committee during its meeting held on June 18, 2019 was told that the quantum of foreign currency amount to be moved within the country was not defined in the bill.
The SBP has reviewed the bill in the light of directions of the standing committee and has proposed a limit of US 10,000 or equivalent for individual physically or otherwise within the Pakistan. This limit for authorised dealers, foreign exchange companies, and money changers will be prescribed by the SBP. Any inland movement exceeding the limit shall require permission of the SBP.
The meeting was told that the Prime Minister during a meeting held on September 3, 2018 desired to curb the practice of Hawala/Hundi and other forms of illegal foreign exchange transactions and Finance Division was directed to take immediate steps to curb these illegal practices through amendments in the existing laws.
The committee was further informed that foreign exchange policy and operations in Pakistan are governed under the provisions of the FERA Act, 1947 which empowers SBP to regulate inflow and outflow of foreign exchange. After a series of meetings with stakeholders, some amendments were suggested in FERA, 1947/SBP to amend section 23 of FERA by enhancing punishment, making the offence punishable under the section as cognizable and non-bailable, saying new provisos will provide explicit powers to FIA to take prompt action against illegal foreign exchange operators without requirement of any formal complaint from SBP and empower the tribunals to take action against illegal foreign exchange operators in expeditious and time bound manner.
Moreover, a new section 8A is inserted to restrict the free movement of foreign exchange within the country without any limit. Therefore, the Foreign Exchange Regulation (Amendment) Act, 2019 duly vetted by the Law and Justice Division, ratified by the Cabinet Committee for Disposal of Cabinet Cases (CCLC) and approved by the Federal Cabinet in its meeting held on December 20, 2018, was introduced in the National Assembly on April 22, 2019 and National Assembly referred the bill to the National Assembly Standing Committee on Finance for consideration.
The standing committee considered the amendment bill in its meeting held on May 02, 2019 and, after a detailed discussion, directed State Bank of Pakistan (SBP) to present a comparative analysis of foreign exchange regulation regimes of India, Bangladesh and Pakistan at the earliest; and the governor SBP should attend the meeting personally to explain the proposed amendments in the FERA, 1947 and respond the queries of the member of the committee.
The SBP conducted a detailed exercise on the desire of the standing committee and furnished briefs on formal and informal system of foreign exchange in Pakistan as well as measures taken by the government/SBP to strengthen regulation of foreign exchange regime and a comparative statement showing the original text, proposed amendment, present state of foreign exchange regulation regimes of India, Bangladesh and Pakistan and the rationale for proposed amendments for the information and understanding of members of the standing committee.
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