The State Bank of Pakistan (SBP) on Wednesday informed the National Assembly Standing Committee on Finance that over $7.9 billion has been taken out of the country through foreign currency accounts during the last five years. SBP officials were responding to various queries of the members of the committee on foreign currency accounts. The committee was informed that the law allows individuals to take dollars out through these accounts whereas special permission is needed to remit money out of the country for investments.
The SBP official told the committee that the said permission to individuals has been granted under the Protection of Economic Reforms Act 1992 and the account holders are free to take out money from the country. The Chairman of the committee raised question if any foreign currency account holder can buy dollars from the open market and remit it out of the country. Responding to this, Director SBP Irfan Ali informed the committee that "there are certain barriers in the process but legally the account holder can do it".
Asad Umar of PTI quoted data from Dubai Land Records that Pakistanis hold property worth $6.6 billion in that city. He further said that we are having stringent policy for investing from Pakistan to anywhere abroad but there is no check on individuals to buy property abroad if they hold foreign currency accounts.
Mian Abdul Mannan and Muhammad Pervaiz Malik of PML-N repeatedly pointed out that the law is clear and there is no need to talk over the matter. On the other hand, Abdul Rashid Godil of MQM questioned, "Can we know who was in power in 1992 when this flawed law was made?"
Asad Umar was of the view that the first offshore company was established in 1992 and foreign currency accounts with such immunity were opened in 1992, "so things are quite clear." Responding to a query, the SBP officials also told the Committee that India's law does not allow the resident Indians to hold foreign currency accounts. They say that "all your dealings in India are in rupee - so why do you need a dollar account?"
The committee was also informed that permission is needed from the SBP to establish business abroad if the amount remitted is up to $5 million and permission by Economic Co-ordination Committee (ECC) is mandatory for greater amounts. In the last three years permissions have been granted to take out $601 million abroad for establishing businesses.
The Committee was also informed by Syed Iqbal Ashraf, President National Bank of Pakistan (NBP), that only 62,000 applications have been received for the PM's Youth Loan Programme, but at the same time only 15,000 applications have been approved. During this period of around two and a half years the National Bank has processed around 8,100 applications disbursing some Rs 7.7 billion. We will hopefully process around 13,500 applications by the end of the year, he added.