About 10,000 illegal moneychangers have been active following the State Bank of Pakistan (SBP) and Federal Investigation Agency (FIA) imposed some restrictions on sale and purchase of foreign exchange by the licensed Exchange Companies (ECs). Sources told Business Recorder on Thursday that the customers find it easy to trade with the illegal foreign exchangers and convert to the black market due to the condition of producing CNIC copy while selling or purchasing foreign currency.
"Customers are refusing to produce and submit copy of CINC for business transaction in ECs'", they said, adding that they rather prefer to do business with illegal moneychangers, who are operating in all parts of the country. They criticised the condition of producing a receipt of purchasing of foreign at Jinnah International Airport imposed by FIA, saying that it will led the travellers to produce fake receipts for some leftover foreign exchange of the last abroad trip to meet the condition.
The conditions imposed by SBP and FIA are damaging the legal business of foreign exchange companies, representatives of ECs told Business Recorder. "Our business activities have reduced by some 60-70 percent in the last one week in wake of the CNIC condition imposed by SBP for the sale and purchase of foreign exchange," said Chairman Exchange Companies Association of Pakistan (ECAP) Malik Bostan.
He said that the daily transaction volume of ECs continued to decrease after the imposition of CNIC condition. The daily reporting of transactions to SBP revealed the decrease in business volume, he added. He said that the customers were avoiding interaction with the licensed exchange companies due to the "unrealistic" demand of submission of CNIC copy.
"The SBP's move has panicked the general masses compelling them to switch to the black market for buying and selling of foreign currency particularly dollar," he said. Bostan added that several illegal moneychangers had emerged in Karachi, where the undocumented currency trade continued without any restrictions of SBP and FIA.
He said that several customers protested at the exchange counters of the legal companies, when they were asked to submit CNIC copy. He maintained that the ECs were supporting the SBP's policies for rupee's stability. However, he said, SBP should reconsider its policies in consultation with ECs. "The central bank should exempt sellers of dollar up to 5,000 from CNIC condition and it should be only for the buyers of foreign exchange", he demanded.
He said that the condition of producing the receipt of foreign exchange's buying to FIA at Jinnah International Airport had many flaws, hence it should be revised for positive results. "The state bank's condition of submitting CNIC copy will increase the Hundi and Hawala business in the country and some 10,000 illegal currency dealers have been active across the country after the new guidelines of SBP and FIA for the trade of foreign exchange," said Zafar Paracha of Paracha International Exchange.
He said that Boultan Market, Pan Mandi, Khada Market in Karachi, Chock Yadgar in Peshawar and City Centre in Gujrat were among the few famous markets of the illegal trading of foreign exchange. He said that FIA's condition of producing receipt of foreign exchange buying should be compulsory only for the frequent travellers.
"Several travellers posses foreign exchange particularly dollar of their previous visits, for which they don't have any receipts. Therefore, in such cases it is not possible anyone to produce a receipt of Exchange Company at airport," he added.
"The ECs are trying to curb dollar smuggling and make Pak rupee stronger, however, some FIA and SBP's condition are disturbing the business of the legal companies established after acquiring license from SBP and are paying million of rupees as taxes," Paracha said, adding that FIA and SBP's officials were also visiting ECs to monitor the business activities due to which customers were avoiding to deal with ECs. Paracha urged the SBP and FIA to revises the new conditions and made it easier for ECs as well as customers.