(i) Under the existing instructions, the Authorised Dealers (Banks
authorised to deal in foreign exchange) without the prior approval
of the State Bank, open foreign currency accounts of the following:
a)
Pakistan Nationals resident in or outside Pakistan, including
those having a dual nationality.
b) All foreign nationals, whether residing abroad or in Pakistan.
c) Joint Account in the names of residents and non-residents.
d) All diplomatic missions accredited to Pakistan, and their
Diplomatic Officers.
e) All International Organizations in Pakistan.
f) Firms and companies established/incorporated and functioning
in Pakistan, including those having foreign share-holdings except
as outlined in sub-para (v) below.
g) Charitable Trusts, Foundations etc. which are exempted from
income tax.
h) Branches of foreign firms and companies in Pakistan.
i) Non-resident Exchange Companies even if owned by a bank or
financial institution.
j) All foreign firms/corporations, other than banks and financial
institutions owned by Banks, incorporated and operating abroad
provided these are owned by persons who are otherwise eligible
to open foreign currency accounts.
However,
the facility is not available to airlines operating in/through
Pakistan or collecting passage and freight in Pakistan and the
investment banks, leasing companies and modaraba companies including
those which have been granted licences to deal in foreign exchange.
(ii)
Opening of foreign currency account covered by sub-para (i)
is subject to the condition that these are not fed with:
a)
any foreign exchange borrowed under any general or specific
permission given by the State Bank, unless otherwise permitted;
b) any payment for goods exported from Pakistan;
c) proceeds of securities issued or sold to non-residents;
d) any payment received for services rendered in or from Pakistan;
e) earnings or profits of the overseas offices or branches of
Pakistani firms and companies including banks, investment of
resident Pakistanis abroad; and
f) any foreign exchange purchased from an Authorised Dealer
in Pakistan for any purpose.
(iii)
Corporate Bodies/Legal entities cannot generate funds from the
Kerb market for deposit in their foreign currency accounts.
(iv)
Foreign currency accounts can be fed by remittances received
from abroad, travellers cheques issued outside Pakistan (whether
in the name of account holder or in the name of any other person),
foreign currency notes and foreign exchange generated by encashment
of securities issued by the Government of Pakistan.
(v)
Opening by firms/companies of foreign currency accounts, which
are to be fed through the funds of foreign equity/foreign currency
loans raised for establishment of industrial and other projects
and by contractors who receive payments in foreign exchange
from the employers, would be as per procedure laid down in paragraph
8 of this chapter.
(vi)
These accounts are free from all Foreign Exchange restrictions.
In other words, account holders have full freedom to operate
on their accounts to the extent of the balance available in
the accounts either for local payments in Rupees or for remittance
to any country and for any purpose or for withdrawals in the
shape of foreign currency notes and travellers cheques. However,
a restriction was placed on withdrawal in foreign currency from
some categories of foreign currency accounts existing as on
28th May, 1998. The instructions issued vide FE Circular No.12
of 1998, as amended from time to time, would continue to be
operative, till the restrictions are lifted. Holders of such
accounts are, however, free to transfer their accounts from
one Authorised Dealer to another.
(vii)
Accounts can be maintained and payments (excluding local payments)
made in any currency of choice of the account holder. Credit
Card facility can be obtained by the account holders to the
extent of the balances held in their respective accounts, for
utilization in and outside Pakistan provided settlement of the
bills in respect of expenditure within the country is made in
Rupees only and the relevant foreign currency amount is taken
by the Authorised Dealers in their daily exchange position.
(viii)
Authorised Dealers can mark lien on the foreign currency accounts
of the account holder and third party in respect of banking
facilities like credit cards, bank guarantees and loan/credit
etc. availed of by the account holders in and outside Pakistan.
The aggregate amount of the facilities availed of in and outside
Pakistan should not, however, exceed the balance in the respective
accounts at any point of time and the regulations on credit
should be strictly adhered to.
(ix)
Head/Principal Offices of Authorised Dealers will send to the
State Bank of Pakistan/SBP Banking Services Corporation, Karachi
such returns in respect of these foreign currency accounts as
may be prescribed from time to time.
(x)
The Authorised Dealers are free to decide, as per Prudential
Regulations in force, the rate of return on these accounts payable
to the depositors. They are also free to recover reasonable
bank charges on handling cash transactions in foreign currencies
received into or paid out of such accounts.
(xi) The non-residents are exempted from payment of withholding
tax and compulsory deduction of Zakat. Withdrawals from these
accounts in the shape of cash currency notes is allowed and
account holder is at liberty to make remittances from his account
to the extent of his balance in his account.
2.Special
Foreign Currency Accounts of Private Power Projects.
(i) Authorised
Dealers may open the following Special Foreign Currency Accounts/Off-shore
Foreign Currency Accounts of private power projects in Pakistan
as per the Implementation Agreements (IAs) entered into with
Private Power and Infrastructure Board (PPIB), Government of
Pakistan. These accounts will be maintained during the construction
and operation of the projects for the following purposes subject
to the conditions mentioned against each and the balances held
in such accounts will be retained by the Authorised Dealers
in addition to their Exposure Limits and will also not be required
to be reported under F.E. 25 Scheme:
a)
Special Foreign Currency Account in or outside Pakistan.
This will
be maintained for deposit of foreign equity and foreign currency
loan under the Loan Agreement registered with the State Bank/SBP
Banking Services Corporation. The amounts available therein
will be utilized for the purposes of the project as provided
for in the IAs.
b)
Special Foreign Currency Insurance Account.
This will
be maintained for depositing amounts required for payment of
insurance/reinsurance premia and for receiving insurance/reinsurance
claims against covers taken in foreign currency outside Pakistan
with the approval of the Controller of Insurance or with State
Bank’s/SBP Banking Services Corporation’s approval
from an insurer in Pakistan, provided that amounts not required
for meeting expenditure in foreign exchange will be repatriated
to Pakistan and converted into rupees.
c)
Off-Shore Foreign Currency Control Account.
This will
be maintained subject to the condition that PPIB/Independent
Engineer would determine for each project the portion of revenues
required to meet the foreign currency cost for operating the
project.
d)
Off-Shore Foreign Currency Operating Account.
This will
be maintained subject to the condition that O&M expenses
to be remitted/deposited periodically to this account will be
apportioned by the PPIB/Independent Engineer.
e)
Off-Shore Disputed Payment Escrow Account.
This will
be maintained subject to the condition that the balance will
be remitted to Pakistan once the dispute is over.
f)
Off-Shore Foreign Currency Debt Payment Account.
This will
be maintained for depositing the amount required for Debt Service.
g)
Off-Shore Debt Service Reserve Account.
This will
be maintained subject to the condition that this account will
be liquidated simultaneously with the retirement of debt and
the maximum balance in this account would not exceed the next
12 months Debt Service Payment (both Principal and Interest).
h)
Off-Shore Foreign Currency Maintenance Reserve Account.
This will
be opened and maintained subject to the condition that this
amount will be liquidated simultaneously with the life of the
agreement and that this account will hold the maximum of US$
3 million during the term of Power Purchase Agreement.
i) Off-Shore
Foreign Currency Dividend Account.
This will
be used for receiving remittance of dividends as and when declared
and paid by the company.
(ii) Interest
earned on balances held in these accounts will be repatriated
to Pakistan.
(iv) There
will be nil balance in the Main Control Account and all other
accounts after the expiry of the relevant Agreement Period.
(v) Any
earnings from dealing in currency/exchange should also be repatriated
to Pakistan.
(vi)
Authorised Dealers will ensure that Income Tax, wherever due
on payments made through the accounts,
is duly deducted and paid to the Income Tax Authorities.
(vii)
Authorised Dealers may also open Special Foreign Currency Accounts
of the foreign EPC (Engineering, Procurement and Construction)
and O&M (Operation and Maintenance) contractors of the Power
Projects operating in Pakistan with the approval of the Government
for receipt of foreign currency amounts under the contracts
awarded to them by the Power Projects and its utilization in
accordance with the EPC/O&M contracts.
3.Special
permission for Foreign Currency Accounts.
(i)
Foreign Oil/Mineral exploration companies and foreign contractors
and their foreign sub-contractors may be allowed by the Authorised
Dealers to open foreign currency accounts under the Scheme described
in paragraph 6 or Special Foreign Currency Accounts subject
to the condition that they will meet all their expenditure in
Pakistan including salaries of foreign nationals/non-residents
in Pak Rupees only, out of rupee payments, if any, received
by them in terms of their contracts/by converting in the inter-bank
market funds received from their Head Offices/by converting
funds from their foreign currency accounts in the inter-bank
market.
(ii)
Firms and companies raising foreign equity and foreign currency
loan may be allowed by Authorised Dealers to open special foreign
currency account for receiving and retaining the foreign funds
on submission of information about the source of foreign funding
and the amount required to be retained in foreign currency.
The funds available in such foreign currency accounts can be
used by the account holders for making only those types of payments
which are otherwise permissible in terms of the instructions
laid down in this Manual (e.g. imports, consultancy) and which
are related to the business of the account holder. Any amount
not so used will be required to be converted into rupees in
the inter-bank market and no withdrawal will be allowed in the
shape of foreign currency notes.
4.General
permission for Maintenance of Accounts abroad by Resident Pakistanis.
Pakistan
nationals resident in Pakistan are permitted to open or maintain
any foreign currency accounts with banks etc., outside Pakistan,
in any country other than Afghanistan, Bangladesh, India and
Israel.
5.Payments by Foreign Nationals in Foreign Currencies.
Payments
in foreign currency by foreign nationals residing in Pakistan
to or on behalf of residents of Pakistan whether Pakistanis
or foreign nationals are prohibited. Foreign nationals should
not, therefore, directly or indirectly, make foreign currency
available to the residents or to other persons on their behalf
against payment in Rupees. Such payments are prohibited even
from their foreign currency accounts which they are permitted
to maintain and operate from Pakistan.
6.Foreign
Exchange received by Residents in Pakistan.
Payments
in foreign exchange received by an Authorised Dealer on behalf
of a resident in Pakistan must not be retained in foreign exchange
but must be converted into Rupees unless the State Bank has
given general or special permission to the beneficiary to retain
the foreign exchange received by him.
