KARACHI: The State Bank of Pakistan (SBP) has introduced a new category of foreign currency account titled Foreign Currency Value Account (FCVA) to facilitate Pakistanis for investment in foreign currency denominated government registered debt securities.

Chapter 6 of the Foreign Exchange (FE) Manual provides general instructions relating to opening and maintenance of Foreign Currency Accounts in Pakistan. Accordingly, SBP has inserted a new para 8A after para 8 in Chapter 6 of the FE Manual for Foreign Currency Value Account (FCVA).

According to SBP, in order to facilitate the non-resident Pakistanis as well as resident Pakistanis, who have assets abroad duly declared with Federal Board of Revenue (FBR), for investment in foreign currency denominated government registered debt securities on repatriable basis, it has been decided to introduce a separate category of foreign currency account.

Authorized Dealers may open "Foreign Currency Value Account" of a non-resident individual Pakistani and a resident individual Pakistani who have duly declared assets held abroad as per wealth statement declared in latest tax return with Federal Board of Revenue (FBR).

Operations of Foreign Currency Value Account will be governed by the regulations issued by SBP. ADs will clearly mark the account as resident or non-resident at the time of account opening and ADs will allow operations in the account through the digital channels e.g. internet/mobile banking, ATM/debit cards. The ADs may also issue a cheque book to the account holder if required.

ADs may issue supplementary ATM/debit cards as per applicable laws/regulations and the resident individual desirous to open FCVA will have to provide the declaration of his/her assets held abroad, including latest wealth tax statement filed with the FBR.

The ADs are encouraged to provide online real time convertibility from FCY to PKR based on the request made by the account holder digitally for the eligible debits from the account. For the sake of transparency, the ADs will indicate the exchange rate applicable to the transaction.

ADs may allow non-resident Pakistanis to open the account jointly with other residents/non-residents as per applicable laws/banking practices. These accounts should, however, be treated as non-resident accounts. However, a resident Pakistani having foreign assets declared with FBR may be allowed to open the account jointly with a resident only.

In case the account becomes dormant due to non-operation, ADs will devise a mechanism, aligned with applicable regulations, to reactivate the account digitally, in case of non-resident account. However, for resident FCVA, the ADs may reactivate the account digitally or otherwise in compliance with the applicable regulations and their own policy.

Authorized Dealers will ensure ongoing monitoring of these accounts to mitigate money-laundering and financing of terrorism (FT) risk.

As per SBP's regulations FCVA account holder can receive remittances from abroad through banking channels and it can also transfer funds from his/her own NRP Rupee Value Account (NRVA) with the same AD.

The account holder can receive profit or interest on the permissible investments made from the account, dis-investment proceeds from the permissible investments made from the account and reversal of any incorrect debit in the account.

Under the debits to the FCVA investment in permissible securities, provided that the relevant laws/regulations permit such investment will be allowed in Government of Pakistan's registered debt securities denominated in FCY only and term deposit/remunerative product scheme, denominated in FCY, of the same AD.

The funds for these investments will be transferred by the ADs only in the eligible products through the instructions received from the account holder in this behalf.

According to SBP, ADs will be required to submit a consolidated monthly statement of transaction(s) executed from FCVA to SBP.

The ADs are encouraged to make necessary arrangement in their system to facilitate non-resident Pakistanis in opening and operating this account remotely through digital channels. ADs will comply with all other applicable rules and regulations.

Copyright Business Recorder, 2020