UPDATED F.E. CIRCULAR
Date 6th June,1998 |
F.E Circular No.17 |
All Authorised Dealers
In Foreign Exchange.
Dear Sirs,
FOREIGN CURRENCY ACCOUNTS.
Please refer to the instruction conveyed
vide F.E. Circular No. 12 dated 29th May, 1998 on the
captioned subject. The position has been reviewed and the following modifications have
been made, which are applicable both to foreign currency accounts and certificates of
investment:-
There are no restrictions on opening of
new foreign currency accounts by persons other than those mentioned in sub-para (i) of paragraph 1 of F.E.
Circular No. 12 of 1998.
No fresh
credit, except in respect of interest / profit accruing on existing deposits, can be made
in accounts of persons resident in Pakistan, and firms and companies functioning in
Pakistan including foreign controlled companies (which includes branches of foreign
companies).
The reference to 'non-resident' employees
of the diplomatic missions accredited to Pakistan, vide paragraph
4 of F.E. Circular No. 12, relates to the diplomatic officers who are permitted under
the foreign exchange regulations to maintain foreign currency accounts.
The relaxation made in respect of foreign
currency accounts of international organizations includes the United Nations and its
agencies. The reference to the non-resident employees of international organizations
relates to the foreign nationals employed by them. The foreign currency accounts
maintained by the British Council, JICA, CIDA, ICRC, SDC and the schools run by the
Foreign Missions in Pakistan (viz. American School) are also exempt from the restrictions
imposed vide F.E. Circular No. 12 of 1998.
Those deposits which cannot be withdrawn
under our instructions or, where there is no restriction, are not withdraw, may be rolled
over by the banks / NBFIs in consultation with the account-holders. The State Bank will
continue to provide forward cover on payment of the prescribed fee.
In respect of those foreign currency
accounts which are not permitted to receive further credits (except interest profits), the
items in transit, which had originated from abroad upto 29th May, 1998 may be
allowed to be credited, provided the amounts do not represent export proceeds or foreign
exchange which was otherwise required to be surrendered to an Authorised Dealer, and
forward cover obtained in the prescribed manner.
It would be in order to allow change of
the currency of a deposit from one foreign currency to another foreign currency, if so
desired by the account-holder.
The
restrictions placed on receipt of funds in foreign currency accounts, do not apply to the
funds received under the National Debt Retirement Programme.
The status of a foreign currency account
cannot be changed from 'resident' to 'non-resident'.
2. It has also been
decided to allow deposits into and withdrawals from the foreign currency accounts of the
following:-
Foreign contractors who are working in
Pakistan under contract and who are meeting their operational expenses either from the
foreign currency brought / received by them from abroad or paid to them by the contracting
public sector agencies in Pakistan, and the foreign sub-contractors of such contractors.
Oil / Gas exploration companies and
mineral companies, who finance their activities in Pakistan out of remittances received
from abroad and / or foreign currency payable to them by a public sector organization in
Pakistan, or foreign currency received for oil/gas supplied by them.
Representative / Liaison offices of
foreign companies which meet their expenses out of remittances received from abroad.
Exporters, opened in terms of the
instructions contained in paragraph 29, Chapter XII of the Foreign
Exchange Manual, to the extent of crediting the amounts of commission / differential and
their use for promotional publicity, collection of commercial intelligence, purchase of
designs / patterns, market studies, bonafide export claims and shortfall in realization of
export proceeds.
Exporters, opened in terms of paragraph 7 of F.E. Circular No. 24 of 1995, of the
temporary credit of export proceeds of consignments for which they had obtained foreign
currency loans, pending maturity of the loan.
Any payment made from the above types of
accounts to Pakistan national living in Pakistan or to firms / companies having rendered
services in Pakistan shall, however, be made in Pakistan rupee at the Authorised Dealers
TT buying rate. Oil / Gas / Mineral exploration companies may, however, make payment in
foreign currency to the firms of foreign origin if there is a contractual obligation in
this regard, which should be verified by the Authorised Dealers before allowing payment.
3. Withdrawals
from the accounts of foreign nationals working in Pakistan who wish to withdraw reasonable
amounts for meeting their expenses in Pakistan and commitments at home or who are leaving
the country will be considered by the State Bank on case to case basis. This facility may
be considered on the basis of a certificate to be given by their employers.
4. In partial modification of the
instructions issued vide F.E. Circular No. 14 of 1998, it would be
permissible for the Authorised Dealers to allow withdrawals from a foreign currency
account of a foreign importer for payment in rupees (at the Authorised Dealers' buying
rate) of the proceeds of goods exported to him from Pakistan, provided the name of the
account-holder and the consignee, as declared on the 'E' form,
is the same.
5. It is clarified
that the cash subsidy payable by the State Bank applies to those holders of foreign
currency accounts, whether maintained by residents or non-residents, who will convert them
into rupees before 1st September, 1998. These accounts will enjoy the following
as announced by the Government:
Exemption from probe
by tax authorities.
Banking confidentiality;
Exemption from wealth tax for
six (6) years according to details to be announced subsequently by Central Board of
Revenue; and
Exemption from income tax on
the interest or profit earned on the dollar accounts before conversion.
Foreign currency deposits having
specified maturates which extend beyond August 31, 1998 can also be converted into rupees
on any earlier date. Authorised Dealer will allow such premature withdrawals / encasement.
In such an eventuality the depositor will receive a lower profit according to established
banking practice.
6. Inquiries are
being received whether the Authorised Dealers may issue encasement certificates in those
cases where the account-holders withdraw amounts from their foreign currency funds in
rupees. It is advised that there is no objection to encasement certificates being issued
in such cases, for the actual amounts of foreign currency debited and the actual amounts
of rupees paid.
7. Application in respect of
withdrawals by foreign nationals, as mentioned in paragraph 3, and
any other hardship case not covered by this circular, may be referred by the Authorised
Dealer maintaining the account, or by their Head Office / Principal Office in Pakistan to
the Additional Director, Foreign Exchange Department, State Bank of Pakistan, Central
Directorate, Karachi (Fax No. 2422083)
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