Interior Minister A Rehman Malik on Sunday directed the FIA to start crackdown against foreign exchange dealers violating Foreign Exchange Act. He was chairing a meeting of representatives of Exchange Companies Association of Pakistan (ECAP), Federal Investigation Agency (FIA) and State Bank of Pakistan (SBP), said a press release.
During the meeting, the government and the ECAP agreed to work together to bring US dollar below Rs 85 in coming days. Malik directed the FIA and Customs authorities to ensure that US dollars are not taken out of country by carriers (Khepias).
He also directed the FIA to constitute a separate task force to see irregularities in foreign exchange business. It was also decided in the meeting that special task forces would be constituted at Chaman, Torkham and Taftaan borders. Moreover special task force comprising FC Balochistan be constituted to control smuggling of various items from the country.
It was also decided that the FIA would investigate cases of under and over invoicing in imports and exports wherein clients were found of doing business without declaring source of funds for settling pending/over due LCs for a larger period than allowed.
Earlier, ECAP brought following issues in the notice of the Interior Minister whereon decisions were taken on the spot: Net Open Position (NOP) of Foreign Exchange of Commercial Banks is not being used judiciously that is resulted in fall of value of Pakistani Rupee due to speculative and forward buying of foreign exchange by importers in consultation with their respective banks.
This misuse has resulted in fall of Rs 4 per US dollar and speculation of further fall up to Rs 4 to Rs 5.
The importers have opened accounts to cover their future imports and started buying US dollars from open market without revealing source of income. This has resulted in drying of US dollars/shortage due to this newly invented mechanism that has badly effected Pakistani Rupee.
It was also noted that commercial banks have started opening letters of credit (LCs) on zero or lesser percentage of margin meaning thereby 100 percent or major finance by banks for their favourite customers. The banks thereby earn Rs 4 per US dollar and for their small interest causing bigger loss to the national exchequer. It was further apprised that if this practice is not stopped it would further depreciate Pakistani Rupee and give rise to US Dollar.
The Interior Minister directed the FIA to take strict action against responsible of above said gross irregularities, which are hampering national interests.
Rehman Malik further directed that the banks, which are holding foreign exchange abroad or not selling in interbank market, should be made to review this practice.
This facility be reviewed and proposed to cut into half of present limit so that supply of foreign exchange in the market could be improved and the desired supply should be brought into money market. In this regard the FIA was directed to have meetings with Governor State Bank and to take action against conniving officials of all the institutions dealing in foreign exchange.
The business community appealed to the government to ensure that zero margin facility not be given to mobile imports, luxury items like TV, ACs, cosmetics, automobiles/cars, spare parts, mineral water and food stuff.
The business community also demanded that computerised system recently ceased by the FBR should be restored as it is causing delays to smooth exports which is major source of foreign exchange.
The business community strongly recommended that Customs authorities should not issue NOC on non-LC items without verifiable transparent proof of funds/settlement. The settlements shown to have settled abroad are banned and said settlements be done at the point of origin of placement of orders.
The transfer of foreign exchange though Hundi and Hawala will be checked with iron hands. Action against Hundi and Hawala operators and Khepias will also be taken strictly and with immediate effect across the country.
The government and the ECAP agreed to work together to bring US dollar below Rs 85 in coming days.
No one will be allowed to deposit foreign exchange in banks without declaring source of purchase and receipt, it was decided.
Any purchase from an exchange company of over US dollar 10,000 will be settled against cross cheque and will be delivered to customers after clearance of the cheque, it was further decided.