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CHAPTER
I
INTRODUCTORY
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Foreign Exchange
Regulation Act, 1947 and Notifications issued thereunder.
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Directions
issued under the Act.
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Amendments.
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Jurisdiction
of the Offices of Exchange Policy Department.
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Authorised
Dealers to notify the Regulations to their Customers and
to report Cases of Evasion.
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References
to the State Bank.
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Submission
of Returns to the State Bank.
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Stationery.
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Definitions.
1.
Foreign
Exchange Regulation Act, 1947 and Notifications issued there
under.
Foreign Exchange Policy and its operations in Pakistan are formulated and regulated in accordance with the provisions of the Foreign Exchange Regulation Act, 1947. The object of this Act is to regulate, in the economic and financial interest of Pakistan, certain payments, dealings in foreign exchange, securities, import/export of currency and bullion. Under the Act, the basic regulations are issued by the Government of Pakistan and the State Bank in the form of Notifications which are published in the official Gazette. The Act, as amended up-to date, is reproduced at the end of the Manual as Appendix I. Notifications issued by the Government of Pakistan under the Act, except those issued in terms of sub-section (2) of Section 19, sub-section (2) of Section 23 and Section 23-B are reproduced as Appendix II and those issued by the State Bank are reproduced as Appendix III.
2.
Directions issued under the Act.
For
the purpose of securing compliance with the provisions of
the Act and the Notifications and any rules, orders or directions
issued thereunder, the State Bank may, under sub-section (3)
of Section 20 of the Act, give directions to Authorised Dealers,
travel agents, carriers, stock-brokers and other persons who
are authorised by the State Bank to do anything in pursuance
of the Act, in regard to making of payments and carrying out
other acts in the course of their business. Directions having
general application are issued in the form of public notices,
F.E. circulars and circular letters etc. Instructions issued
by the State Bank to the Authorised Dealers, Authorised Money
Changers, travel agents, carriers, etc., upto 31-12-2001,
setting out the terms and conditions subject to which they
may engage in transactions covered by the Act, have been incorporated
in this Manual. Contents of this Manual and all instructions,
directions, orders etc., issued under the Act are without
prejudice to the provisions of any other law of Pakistan or
any rules, notifications, orders, directions or regulations
made thereunder.
3.
Amendments.
Changes
in the regulations are generally advised by issue of F.E.
circulars. This edition of the Manual has been issued in the
loose-leaf form. Amendments in the provisions of the Manual
will be printed periodically by the State Bank in the form
of replacement pages which will be substituted in place of
the old pages. It will be in the interest of Authorised Dealers
and other holders of the Manual to ensure that it is kept
updated and the old pages are regularly replaced by new pages
whenever issued. The Manual and its amendments will also be
posted on the State Bank’s Website (www.sbp.org.pk).
4.
Jurisdiction
of the Offices of Exchange Policy Department.
Under
the Act, the State Bank is responsible for day to day administration
of Foreign Exchange Policy which is exercised through its
Exchange Policy Department. The Principal Office of the Department
is situated at Karachi under the charge of a Director. The
Department has following offices with the jurisdiction of
each Office mentioned there against:
| Office |
Jurisdiction |
| 1.
Operations Division,
Exchange Policy Department,
SBP, Central Directorate,
Karachi: |
Karachi
Division. |
| 2.
Hyderabad: |
Hyderabad
Division. |
| 3.
Sukkur: |
Sukkur
Division. |
| 4.
Quetta: |
Quetta,
Kalat, Sibi and Mekran
Divisions. |
| 5.
Lahore: |
Lahore
Division. |
| 6.
Faisalabad: |
Faisalabad
and Sargodha Divisions. |
| 7.
Sialkot: |
Sialkot
District. |
| 8.
Multan: |
Multan
and Dera Ghazi Khan Divisions. |
| 9.
Rawalpindi: |
Rawalpindi
Division |
| 10.Islamabad: |
Federal
Capital Area of Islamabad. |
| 11.Peshawar: |
Hazara,
Kohat, Malakand and
Peshawar Divisions. |
| 12.Gujranwala: |
Gujranwala
Division, excluding Sialkot District. |
| 13.D.
I. Khan: |
Dera
Ismail Khan Division. |
| 14.Bahawalpur: |
Bahawalpur
Division. |
| 15.Muzaffarabad: |
Azad
Kashmir. |
5.
Authorised Dealers to notify the Regulations to their
Customers and to report Cases of Evasion.
Authorised
Dealers are required to bring the Foreign Exchange regulations
to the notice of their customers and to ensure compliance
in their day to day operations. They should also report to
the State Bank every case of evasion or attempt, direct or
indirect, at evasion of the provisions of the Act and Notifications
or any rules, orders or directions issued thereunder, immediately
as it comes to their notice.
6.
References to the State Bank.
Authority
has been delegated to the Authorised Dealers to approve certain
transactions on behalf of the State Bank. In these cases,
Authorised Dealers should, before approving any transactions,
satisfy themselves about the bonafides of the applicant and
the genuineness of the transaction by verifying the necessary
documents. They should refer to the State Bank alongwith their
recommendations/comments only those cases which they are not
authorised to approve. While referring cases to the State
Bank, they should ensure that the applications are on the
prescribed forms, wherever such forms are prescribed and are
supported by appropriate documentary evidence. In all these
cases it will be deemed that they have satisfied themselves
about the bonafides of the applicants and the correctness
of the statements made by them on the application and the
accompanying documents, if any.
7.
Submission of Returns to the State Bank.
Authorised
Dealers must submit to the State Bank returns of their dealings
in foreign exchange on due dates in the forms prescribed in
the Manual. Specimens of all application forms and returns
prescribed by the State Bank are given in Appendix V.
8.
Stationery.
(i)
Forms ‘M’, ‘T-1’, ‘E’ and ‘I’ will be got printed by
the Head/Principal Offices of the Authorised Dealers themselves
strictly according to the size, contents and format of the
specimens supplied to them by the State Bank. These forms
should bear an identifying prefix as per Appendix IV followed
by serial numbers in six digits except in the case of form
'E' which will have seven digits. For example, the first number
of all the forms printed by XYZ bank except form 'E' will
be "XYZ 000001" (i.e. six digits) and so on, and
in the case of form 'E', the serial number will be"XYZ
0000001" (i.e. seven digits) and so on.
The other prescribed forms may also be got printed
by the Authorised Dealers themselves.
These must conform exactly in size, content and format
to the respective forms prescribed by the State Bank.
(ii) As omission of any part in the
printing of the forms is likely to make a material change
and may weaken the position of the State Bank legally, Authorised
Dealers should take utmost care in the printing of the forms.
They should also keep an updated record of the forms printed
and distributed to their branches, which should be kept adequately
stocked to avoid any complaint on account of non-availability
of the forms.
9.
Definitions.
Terms
having special meanings for the purposes of the Act have been
defined in Sections 2 and 13 of the Act.
i)
For the purposes of Section 13 of the Act the term
"persons resident outside Pakistan" covers a foreign
national including foreign nationals of Indo-Pak origin as
also Pakistanis holding dual nationality for the time being
resident in Pakistan. A company registered in Pakistan which
is controlled directly or indirectly by "persons resident
outside Pakistan" is, for the purposes of Sections 13
and 18 of the Act, treated as a "person resident outside
Pakistan".
ii)
For the purposes of Section 5 of the Act the term "persons
resident outside Pakistan" also includes nationals of
Pakistan and persons domiciled in Pakistan, except persons
holding office in the service of Pakistan, who go out of Pakistan
for any purpose.
iii)
In respect
of purposes other than the above, a resident person, bank
or firm is a person who resides in Pakistan. A non-resident
is a person, bank or firm, who resides outside Pakistan. No
definite rules can be laid down for determining whether a
person is ordinarily resident in Pakistan but there is a presumption
that a person is resident if he maintains a home in Pakistan,
or resides in the country for a substantial part of each year,
or pays income tax as a resident of Pakistan. On the other
hand, the fact that a person gives an address in Pakistan
does not necessarily mean that he should be regarded as a
resident if he is in fact only a temporary visitor and is
ordinarily resident outside Pakistan.
iv)
The following terms used in the Manual are described
below:
a)
Rupee- 'Rupee' means the Pakistan Rupee unless
otherwise specified.
b)
Act-
'Act' means the Foreign Exchange Regulation Act, 1947.
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