Circulars/Notifications  

 F.E. Circular No. 31
July 02, 1998 

All Authorized Dealers
in Foreign Exchange,

Dear Sirs,

FOREIGN CURRENCY ACCOUNTS

As announced by the Prime Minister, the foreign currency accounts frozen on 28th May, 1998 stand revived with effect from 1st July, 1998. Now therefore, in pursuance of the decision of the Prime Minister, and in super session / modification of F.E. Circular Nos. 12, 17, 18, and 25 of 1998, the following clarifications are issued in the operation of foreign currency accounts.

  1. All immunities in relation to the foreign exchange referred to in para 2 of Foreign Exchange (Temporary Restrictions) Ordinance, 1998 stand restored for an indetinite period both for old and new foreign currency accounts as well as for the amounts that have been or will be converted into rupees. The Government is in the process of providing the necessary legal cover to this effect.

  2. The State Bank will continue to provide exchange risk coverage to the balances held in the old foreign currency accounts as on 30-06-1998 as well as additional foreign currency deposits flowing to these accounts on regular payment of forward cover fee as determined by the State Bank of Pakistan.

  3. The foreign currency deposits as on May 28, 1998 can continue to be converted in rupees at the exchange rate, but restrictions on their withdrawal in foreign exchange will continue. Amounts of incremental deposits after July 1, 1998 could be withdrawn in foreign exchange, although the Prime Minister has appealed to all such depositors to keep even the incremental amount in their accounts as far as possible.

2. A new foreign currency deposit scheme under new rules was announced on 26-06-1998 vide F.E. Circular No. 25 of 1998. This scheme will continue to operate concurrently. Under the rules of this scheme.

  1. residents and non-residents can open foreign currency accounts will banks in Pakistan.

  2. banks are not under obligation to surrender the foreign currencies received in these accounts to the State Bank; and

  3. no forward cover on deposits received under this scheme will be provided by the State Bank.

3. Borrowing facilities against the security of balances held in the foreign currency accounts / certificates as on 30-06-1998 has been withdrawn. The banks / NDFL will meet this requirement by July 31, 1998. A separate circular is being issued on the subject.

 


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