The Bank of Punjab announced on Monday that its board was proposed the establishment of a wholly-owned Exchange Company (EC).

The development was shared by the bank in its notice to the Pakistan Stock Exchange (PSX).

“In view of the recently introduced structural reforms by State Bank of Pakistan (SBP) in the EC’s sector and challenges posed by the recent depreciation in Pakistani rupee in the open market, leading banks have been encouraged to establish wholly owned ECs with an authorized capital of Rs2.5 billion,” said BoP.

“Accordingly, in view of the current market potential and future expansion needs, an initial feasibility report for the establishment of ‘BOP Exchange Company’ was proposed to the Board of The Bank of Punjab in its meeting held on October 28, 2023,” read the notice.

The bank said that the establishment of an EC is subject to approval from SBP and compliance with relevant laws and regulations.

Last month, the SBP, in its bid to strengthen controls amid the massive fall in the rupee’s value in the open market, decided to introduce ‘structural reforms’ in the EC sector.

Since then, many banks have announced they would establish an EC as a wholly-owned subsidiary: Askari Bank, Habib Metropolitan Bank, Bank Alfalah, Faysal Bank Limited (FABL), Bank Al Habib Limited (BAHL), MCB Bank Limited, Meezan Bank Limited and United Bank Limited (UBL).

The SBP has also raised the minimum capital requirement for EC from Rs200 million to Rs500 million, raising the barrier to entry for the private sector.