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CHAPTER XIII IMPORTS
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This
chapter sets out the regulations relating to sale of foreign exchange by the
Authorised Dealers against import of goods into Pakistan from any country. Import
of goods into Pakistan is regulated by the Ministry of Commerce, Government
of Pakistan, under the Imports and Exports (Control) Act, 1950 and the
notifications issued thereunder. No import is permissible from Israel or
from any other country, which may be notified by the Ministry of Commerce.
Import of goods originating from any of these countries/ sources is also
prohibited. Imports from India are regulated as notified by the Ministry of
Commerce, Government of Pakistan from time to time.
No person can import goods into Pakistan unless he is registered with
the Export Promotion Bureau, under the Registration (Importers and
Exporters) Order, 1993 or exempted from the provisions of the said Order.
Authorised Dealers should, therefore, verify that the importer is registered
or otherwise exempted before any letter of credit is opened/contract
registered or remittance made on his behalf for imports into Pakistan.
Authorised Dealers should ensure that the registration number of the
importer is invariably furnished on Form 'I'. Where the
importer has been granted an exemption, a suitable mention of this fact
should be made on Form
'I'. Before
establishing any letter of credit/registering contracts, Authorised Dealers
should take all precautions to ensure that the goods to be imported under it
are clearly classifiable under the Import Trade Control Schedules. In all
cases of doubt, reference should be made either by the Authorised Dealer or
the importer direct to the Export Promotion Bureau. Failure to do so may
result in confiscation of goods or imposition of penalty for violating the
provisions of the I.T.C. regulations. In all such cases establishment of
letter of credit/registration of contract and/or making of remittance will
also constitute infringement of the Foreign Exchange regulations. Subject to the provisions of this Chapter, imports can be made on FOB basis, CFR liner terms basis or CFR free out basis. However, prior permission of the State Bank shall be obtained for import of sugar and food grains (cereals) on CFR free out basis. 6.
Modes of payments for imports.
Payment for imports may be made either through letters of credit,
without letters of credit against documents received for collection on the
basis of registration of contracts, or as clean remittance without opening
of letter of credit and without registration of contract, as described in
detail in the subsequent paragraphs. 7.
Letters of Credit to be opened only against Firm Contracts. Authorised
Dealers should ensure before opening a letter of credit that in each case a
firm commitment exists. For this purpose, they should ensure that an
invoice, order or indent has been issued by an indentor duly registered as
importer under Registration (Importers and Exporters) Order, 1993 and it
bears registration number of the indentor concerned. It is also permissible
to open a letter of credit on the basis of proforma invoice/order
issued/accepted by the foreign supplier.
Authorised Dealers should also ensure that while opening letters of
credit, full description of the goods to be imported is given in each credit
alongwith their prices. In all cases where the amount of the letter of
credit is Rs.1,500,000/- or over, Authorised Dealers should obtain a
confidential report on the exporter from their branches or correspondents
abroad or in their discretion satisfy themselves as to the standing of the
shipper by consulting standard books of reference issued by international
credit agencies such as Seyds, Dunn and Bradstreet. Such reports should be
obtained by the Authorised Dealers themselves and the reports if submitted
by the importers should not be accepted. Even in the case of imports of the
value of less than Rs.1,500,000/-, it is important that the Authorised
Dealers satisfy themselves about the bonafides of the transactions before
opening letters of credit. 8.
Methods of Payment under Letters of Credit. (i)
Letters
of credit may be established providing for payment to beneficiary either in
the country of origin of goods or in the country of shipment of goods. (ii)
Authorised Dealers may also establish letters of credit providing for
payment to the beneficiary in a third country, not being the country of
origin of goods or the country of shipment provided they are satisfied that
the payment to the beneficiary in a third country does not involve extra
expenditure. This facility is, however, not admissible for the import of
goods which are directly shipped from the ACU member countries. (iii)
Authorised Dealers may also establish letters of credit providing for
shipment of goods of the origin of more than one country provided the
beneficiary remains the same and the shipment does not involve extra
expenditure. (iv)
Letters
of credit established as per (i), (ii) and (iii) above should provide for
payment in any of the following manners: (a)
in any foreign
currency. (b)
in Rupees for credit to the non-resident bank account of the country
of the beneficiary or of the country of origin/shipment of goods. (c)
Through ACU Clearing
Arrangement where letters of credit envisage shipment directly from ACU
member countries. (v)
Opening of letters of credit providing for payment in any other
manner requires prior approval of the State Bank. Such requests giving full
facts of the case alongwith their recommendations should be forwarded by the
Authorised Dealers to the State Bank. (vi)
It is
not permissible to establish letters of credit providing for alternate
countries of origin of goods unless prior approval of the State Bank is
obtained. Letters of credit providing for goods of ‘European Union’
origin may, however, be opened. 9.
Opening of/extension in letters of credit—time frame/change of
beneficiary and commodity/other amendments. (i)
Authorised Dealers can open letters of credit and extend their
validity for a period allowed by the import policy announced by the Ministry
of Commerce subject to compliance with all the conditions laid down therein. (ii)
If the import policy does not lay down any instruction in this
regard, they may open letters of credit for a period upto 12 months.
However, in respect of machinery and mill-work which are required to be
specifically manufactured and the period of manufacture is more than 12
months, the letter of credit may be opened for a period upto 24 months. The
validity of a letter of credit may be extended by the Authorised Dealers for
further periods not exceeding 12 months at a time on payment of fee, if so
prescribed in the import policy, provided there has been no change in the
Import Policy/exchange regulations in relation to the importability of the
goods, the country of origin/shipment, and the method of payment/and if
approached within its validity. An expired letter of credit may also be
similarly revalidated subject to the same conditions. (iii)
Authorised Dealers are also allowed to amend the letters of credit
envisaging change of the beneficiary/goods at the request of the importers
provided the importers approach the Authorised Dealers for the change within
the validity of the letter of credit and import of the goods covered by the
letters of credit are still permissible.
(iv) Authorised Dealers should also ensure to make endorsement
of L/C opened for items (other than freely importable items) whose import is
subject to certain conditions, in the original Category Pass Book.
In case an importer opens letters of credit with more than one bank,
the Authorised Dealer holding the original category Pass Book will make out
photostat copies thereof, authenticate the same and furnish other concerned
Authorised Dealers with it and will keep record thereof. (v)
Authorised Dealers may also make other amendments in the letters of
credit without reference to the State Bank provided the amendments are not
in conflict with the provisions of this Manual or the Import Trade Control
Regulations. (vi)
Letters of
credit may provide for negotiation of documents within a period not
exceeding 30 days from the date of shipment. 10.
Terms on which Letters of Credits may be opened. All
letters of credit and similar undertakings covering imports must provide for
payment to be made against full set of clean on board (shipped) bills of
lading, air consignment notes, railway receipts, post parcel receipts (or in
the case of bulk import of books from U.K. against "Statement of
Dispatches" in lieu of post parcel receipts) showing dispatch of goods
to a place in Pakistan. Sea-way bills should not be accepted. All letters of
credit must specify submission of invoices certifying the country of origin
in addition to any other certificate prescribed in the import policy. 11.
Import of Old Ships for Scrapping. Letters
of credit for import of old ships for scrapping may be opened by the
Authorised Dealers in accordance with the normal procedure after scrutiny of
the following documents: (i)
Memorandum of agreement or contract of sale; and (ii)
Confidential reports on buyers and sellers. Authorised
Dealers will satisfy themselves that the ship is free from all encumbrances
and that the seller has a legal title to the ship. 12.
Letters of Credit for Shipment by Country Craft, Motor Launch or
Truck. Ordinarily
it is not permissible to open letters of credit providing for shipment by
means of country craft, motor launch or truck except by public sector
agencies or by well established and reputable firms in the private sector,
provided in the latter case the Authorised Dealers are satisfied about their
financial and business integrity and they have no doubt that the goods
covered by such letters of credit will be received in Pakistan. In
the case of other importers in the private sector, letters of credit for
import of goods by means of country craft, motor launch or truck may be
opened by the Authorised Dealers subject to the following condition: (i)
The supplier abroad furnishes guarantee of a bank in the country of
export for an equivalent amount to the effect that should the goods be lost
or damaged or pilfered in transit, the above guarantee can be invoked and
the amount remitted against the letters of credit recovered. (ii)
Alternatively,
the letter of credit provides that payment will be made to the foreign
suppliers after the goods have been received and cleared by the Customs in
Pakistan. In
respect of importers in the private sector who are unable to fulfill the
conditions at (i) and (ii) above, the Authorised Dealers should refer their
cases to the State Bank with full particulars. 13.
Remittances in Excess of the Amount of Letter of Credit. In
cases where the value of documents exceeds the amount of the letter of
credit and the foreign correspondent negotiates the documents because of the
excess amount being small or sends them on collection basis, Authorised
Dealers may allow remittance of the excess amount subject to the condition
that the amount does not exceed 5 percent of the amount of credit subject to
a maximum of US $500/-. The bill of entry/certified invoice in respect of
the consignment will be required to cover the increased amount. 14.
Types of Letters of Credit not permitted. It
is not permissible to open clean, revolving, transferable or packing
credits. Applications for opening such letters of credit should be referred
to the State Bank with full particulars. 15.
Prohibition to open Letters of Credit for Import from Certain
Countries. It
is not permissible to open letters of credit for imports into Pakistan in
favour of beneficiaries in Israel or of goods originating from that country. 16.
Imports on the basis of registration of contracts. The
undernoted procedure will be adopted for making imports of goods not subject
to authorisation from the Export Promotion Bureau/Ministry of Commerce as
also not subject to minimum margin restrictions, if the importer wants to
make the import on the basis of registration of contract without opening
letter of credit: - (i)
The importer will submit a copy
of the contract/purchase order/proforma invoice/indent etc. to the
Authorised Dealer for registration. (ii)
The Authorised Dealer
registering the contract etc. will issue to the importer, a registration
certificate in the format appearing at Appendix V-25. (iii)
In case the documents covering imports are received by the branch of
the Authorised Dealer which had registered the contract/purchase
order/indent/proforma invoice, directly from the bankers of the suppliers
abroad, the remittance may be effected in terms of the instructions laid
down in paragraph 23 (i) of this chapter provided the documents conform to
the terms of the relative contract/purchase order/indent or proforma
invoice. (iv)
In case the shipping documents are received by the importers directly, or by
the Authorised Dealer from the overseas supplier instead of the bankers of
the suppliers, remittance should be made in accordance with the instructions
contained in para 23 (ii) of this chapter. (v)
In case of imports from ACU member countries, remittances will be
effected through ACU Clearing Arrangements. (vi)
Forward cover will be available to the importers in accordance with the
terms and conditions laid down in Chapter IV of this Manual. (vii)
Authorised Dealers will incorporate the figures of the contracts registered
by them/ remittances made thereagainst in the statements as per appendices V-131, V-132 V-133 and V-134 (para 15-Chapter XXII). 17.
Imports without letter of credit/registration of the indent/proforma
invoice/order. (i)
In terms of the import policy, registered importers are permitted to
make imports upto specified
value ( US$ 5,000/- as per Import Trade and Procedure Order 2000) without
opening of letters of credit or registering the indents/proforma invoices or
orders with the Authorised Dealers, and make remittances thereagainst. The
registered importers are free to make remittances in respect of such imports
either in advance or after receipt of the goods in Pakistan. The remittances
can be made through demand draft/telegraphic transfer/mail transfer. In such
cases where the registered importers make advance payments for such imports,
they will be required to furnish to the Authorised Dealer at the time of
making a request for remittance, an undertaking to produce invoices and
bills of lading/airway bill within a period of four months from the date of
advance payment. The Authorised Dealers will pursue the matter with the
importers and report those cases to the area office of the Exchange Policy
Department where the requisite documents are not produced within the
prescribed time limit. In cases where remittances are made after receipt of
goods in Pakistan, the registered importers can approach the Authorised
Dealers for remittance on the basis of invoices and original bills of lading
or airway bill. The Authorised Dealers have general permission to make
advance payments or arrange remittances against the prescribed documents on
receipt of goods in Pakistan. (ii) At the request of
industrial establishments registered as importers, Authorised Dealers may
issue foreign currency demand draft upto the value prescribed in the Import
Policy (currently US$ 15,000 per fiscal year for 2000-2001) for import of
spare parts/machinery, without opening of letter of credit, provided such
import is made by air or by courier. Authorised Dealers will maintain a
record of all such drafts issued by them. They will obtain from the
applicant a declaration showing the amount already remitted by him during
the current fiscal year and issue demand draft only upto the extent of the
balance entitlement. They will also obtain Exchange Control copy of Bill of
Entry and evidence to the effect that the import was made by air/courier.
These records will be retained till the next inspection of the concerned
bank branch by the State Bank’s Inspectors.
Authorised Dealers may open letters of credit or register contracts
for imports into Pakistan providing for payment on usance basis subject to
the condition that such letters of credit/contracts do not stipulate payment
of any amount by way of interest separately. The usance should commence from
the date of issue of Bill of Lading/Air Way Bill etc. or the acceptance of
Bill of Exchange by the drawees as the case may be. The letters of
credit opened on usance basis cannot subsequently be converted on sight
basis. Similarly the terms of the contracts covering payments on usance
basis registered by the Authorised Dealers cannot subsequently be changed to
sight basis. It is not permissible to effect payments of usance bills
prematurely. 19.
Imports by public sector agencies to which special allocation is made
by the Government. Public
Sector agencies like WAPDA, Karachi Electric Supply Corporation Limited,
Pakistan State Oil Co. Ltd., OGDC, etc. which are allocated foreign exchange
for their import requirement or the private parties who are allowed to
import on Defence/Railway's account shall make applications to the area
Exchange Policy offices of State Bank of Pakistan for permission to get the
contracts registered with the Authorised Dealer/open letters of credit, on Appendix
V- 26. Authorised Dealers will register contract/open letter of
credit in these cases on the basis of clearance issued by State Bank on Appendix V- 26. 20.
Remittance of bank charges in respect of imports. Authorised
Dealers can make remittance of the following bank charges on account of
imports. The particulars of the charges should be specifically mentioned on
the relevant forms. (i)
L.C. Advising Commission. (ii)
L.C. Amendment Commission. (iii)
L.C. Confirmation Commission. (iv)
Negotiation Commission. (v)
Un-utilized letter of credit Commission. (vi)
Payment Commission. (vii)
Reimbursement Commission. (viii)
Collection Commission. (ix)
Acceptance Commission (Usance Drafts). (x)
Postage and Cable Charges. Remittances
of bank charges other than the items mentioned above in respect of imports
will be subject to the prior approval of the State Bank. 21.
Remittance of Proceeds of Dishonored Bills. In
those cases where the original drawee dishonors the bill and the foreign
shipper or his local agent finds another buyer, the Authorised Dealers may
make remittance not exceeding the value of such bills without the prior
permission of the State Bank if there are no restrictions in the import
policy issued by Ministry of Commerce. 22.
Remittance involving Violation of I.T.C. Regulations. Authorised
Dealers may allow remittance of the value of imports made in contravention
of the import policy if the Federal Government has condoned the
contravention and the Customs have released the goods. Such remittance may
be allowed on submission of the invoice, bill of lading and Exchange Control
copy of Customs Bill of Entry. 23.
General Authority for Remittances against Imports. (i)
Authorised Dealers
may approve, on behalf of the State Bank, applications for remittance
against imports into Pakistan provided the documents covering imports,
whether under letters of credit or otherwise, are received through them and
the conditions set out in this chapter are complied with. The relative Form
'I' should be certified accordingly when reporting the sale to
the State Bank. In the case of imports by post, Authorised Dealers may make
remittances without the prior approval of the State Bank, only if the post
parcels are addressed directly to them. In cases, where the parcels are
addressed direct to the individuals or care of the Authorised Dealers,
applications should be forwarded to the State Bank for prior approval.
Authorised Dealers should invariably attach a copy of the relative invoice
with the original or quadruplicate 'I'
Form, as the case may be, submitted by them to the State Bank
with their monthly return of sale in terms of para 33 of this chapter. (ii)
Where
the shipping documents are received by the importers directly, or by the
Authorised Dealer from the overseas supplier instead of the bankers of the
suppliers, remittance should be approved only after the goods have been
cleared from the Customs and the Exchange Control copy of Bill of Entry or
Customs certified invoices in the case of imports by post, relative
invoices, Non-negotiable copies of the Bill of Lading/Airway Bill/Railway
Receipt/Truck Receipt etc. and 'I'
Form duly completed and signed have been submitted. 24.
Collection of Freight on Imports on F.O.B. basis in the Private
Sector. The
following procedure will be followed for imports on FOB basis in the private
sector: (i)
The
importers desiring to make imports on FOB basis will get the letters of
credit opened/contracts for imports on consignment basis registered
through/with their bankers provided the importers fulfill other instructions
issued by the Government of Pakistan/State Bank of Pakistan with respect to
imports. (ii)
The shipping lines/airlines will
obviously issue Bills of Lading/Airways Bills in connection with FOB imports
on "Freight to Collect" basis. As and when freight is required to
be paid in Pakistan rupees, the importers will approach the Authorised
Dealers who had opened letter of credit/registered the contract for import
on consignment basis alongwith a copy of Bill of Lading/Airway Bill
indicating the amount of freight payable together with the freight invoice
issued by the carrier, where available, for issuance of a certificate in the
format appearing at Appendix V-27 which will bear the name/address of the
issuing Authorised Dealer and a running serial number. (iii)
The importers will then pay the freight amount to the carriers in
Pakistan rupees and will also surrender the "certificate" referred
to in the preceding sub-para to the concerned carrier. (iv)
Airlines/shipping companies and their agents will not accept freight
on FOB imports without Authorised Dealers' certificate mentioned in sub-para
(ii) above. The airlines/shipping companies will invariably attach the said
"certificate" (Appendix V-27) in original alongwith the
applications to be made for allowing remittance of surplus freight
collections. 25.
Collection of Freight on F.O.B. Imports by the Public Sector. In
the case of imports by the public sector on FOB basis the carriers should
not accept freight in Rupees without the approval of the State Bank.
Approval will be given by the State Bank after charging the full amount of
the freight to the foreign exchange allocation of the respective
Government/Semi-Government agency. While applying for approval, the carrier
company will produce with the application a letter in the prescribed form
(Appendix V-28) from the concerned Department/Agency authorising the State
Bank to debit its foreign exchange allocation with the freight amount. As an
exception, it will be in order for the carriers to accept freight in Rupees
on account of F.O.B. imports by the Ministry of Defence only subject to
post-facto approval. Application for permission to pay freight in Rupees in
respect of imports by the Ministry of Defence will be made by the Controller
of Military/Naval/Air Force Accounts in triplicate in the above proforma.
Approval will be accorded by the State Bank on the original copy of the
application with the following narration. "Payment
of freight in Rupees as indicated above allowed". While
the triplicate copy of the application will be retained by the State Bank,
the original and duplicate will be returned to the Controller of
Military/Naval/Air Force Accounts. The latter will furnish the original copy
to the carrier concerned. 26.
Shipment of Public Sector cargo through PNSC vessels/PIA. As
an exception to the provision of paragraph 25 ibid it will be in order for
the PNSC and PIA to accept freight in Pak Rupees on FOB imports by the
Public Sector agencies (Ministries/Departments, autonomous and
semi-autonomous public sector organizations) provided the goods are carried
by them on freight to pay basis. PIA will, however, accept cargo only for
the sectors covered by it. Authorised Dealer's Certificate mentioned in Para
24 (ii) will not be required to be produced to PNSC/PIA by the importing
agencies. 27.
Payment of Freight on Import of Trade Samples. Airlines/shipping
companies can accept freight in Rupees upto Rs. 2,000/- per year per
registered importer for import of bonafide trade samples. While accepting
freight the airlines/shipping companies should obtain a certificate from the
registered importer to the effect that the total amount of freight already
paid including the amount to be paid during the calendar year on account of
trade samples received by him, does not exceed the limit of Rs. 2,000/- The
certificate should be submitted by the airlines/shipping companies alongwith
their application for remittance in which the collection of such freight is
included. 28.
Imports on Private Account. Certain
categories of imports are exempted from the Import Trade Control
Regulations. For example, in transit imports, imports by diplomatic
officials in Pakistan, imports in bond, imports of gift parcels upto the
exempted limit and imports by private parties for their personal use upto
prescribed limits. Authorised Dealers should not allow any remittance
against such imports except as laid down in Chapter
XVI. 29.
Imports by PICIC/NDLC under Foreign Currency Lines of Credit. (i)
PICIC/NDLC can open letters of credit under the foreign currency
lines of credit contracted by them with the approval of the Government of
Pakistan, and the foreign currency loans contracted by the Government of
Pakistan and placed at their disposal for on-lending to their customers. (ii)
In
all the cases of imports against letters of credit issued by PICIC/NDLC, it
should be ensured that import is made on C&F basis unless shipment is
made on Pak flag vessels and in that case letters of credit may provide for
imports on FOB basis on payment of freight in Pakistan rupees. (i)
State
Bank may consider applications for advance remittance against imports where
the goods are of a specialized or capital nature. Applications for such
advance remittance should be made to the State Bank on Form
'I' and should be accompanied by the original contract (with a
spare copy) entered into between the importer and the foreign manufacturer
or supplier. The applications should also be supported by an undertaking in
the prescribed form (Appendix V-29) duly countersigned by the Authorised
Dealer. In special cases advance remittance may be allowed upto 33 1/3% of
the estimated C & F value of the total quantity of the goods to be
imported. (ii)
In the
case of import of books and subscription to journals and magazines etc., by
Government and Semi-Government agencies, Authorised Dealers may allow direct
advance remittance upto the amount of the relative letter of
credit/contract. In the case of subscription to magazines/journals etc.,
there will be no Customs Bill of Entry/certified invoice. In such cases,
Authorised Dealers will attach the relative debit note with the duplicate of
Form
‘I’ giving on both a suitable remark indicating that the remittance has
been allowed in advance. As regards import of books, there will be usual
Customs Bill of Entry/certified invoice which will be processed in the
normal course. (iii)
Authorised Dealers may allow advance remittances for import of books,
journals and magazines etc., by commercial importers upto the amount of
relative proforma invoices. Since magazines and journals are imported in
bulk by the commercial importers in their own names, there will be usual
Bills of Entry/certified invoices as in the case of import of books. 31.
Use of foreign exchange acquired for Imports. In
all cases of remittances against import into Pakistan, the importers shall
not use the foreign exchange so acquired other than for that purpose. Applications
for remittance against imports into Pakistan should be made on Form
'I' (Appendix V-30) which should be signed by the importer or his
authorised agent. The signatory should disclose his status/capacity in the
concerned firm/company etc., i.e. Director/Partner/Proprietor/Manager etc.
In case the form is signed by the agent of the importer, it should be
ensured by the Authorised Dealers that he holds a valid legal power of
attorney from the importer and the terms of the power of attorney are such
that the importer as well as the attorney can be held responsible jointly
& severally under the Foreign Exchange Regulation Act, 1947. The form
should be submitted to an Authorised Dealer who must sign the certificate as
provided therein under his stamp and signature. In cases where the
Authorised Dealers are empowered to approve remittances on behalf of the
State Bank, they will do so by recording their approval on the form. In all
other cases, the forms together with the required supporting documents
should be forwarded to the State Bank for approval. 33.
Functional Utility of the various copies of Form ‘I’. Form
'I'
consists of four copies. The original copy of the form duly signed by the
importer is required to be sent to the State Bank by the Authorised Dealers
with their monthly return of sales. In cases where the importers do not
retire the documents and the Authorised Dealers fail to get the original
copies of the form signed by them, they should themselves sign the
quadruplicate copy of the form and send it with the monthly return to the
State Bank. All cases where the importers fail or refuse to sign the Form 'I' should be
specifically reported to the State Bank. 34.
Indication on Form ‘I’ for Government Import. In
the case of remittances against imports by Government Departments or in
cover of imports by private parties which are marked "ON GOVERNMENT
ACCOUNT", Authorised Dealers should mark Forms 'I' with a bold
letter 'G' to indicate that the remittance is on Government account. In
the event of total or partial loss of goods, it will be the responsibility
of the importers to recover claim from insurance company/shipping
company/supplier, as the case may be. 36.
Designation of Authorised Dealers for imports under Special
Arrangements. (i)
The
State Bank designates Authorised Dealers for handling imports under Foreign
Loans/credits and barter agreements including PL-480 programme. Letters of
credit for import under these arrangements are required to be established
through the designated Authorised Dealers only. Importers are, however, free
to approach the designated banks either directly or through their bankers. (ii)
In
the case of US AID Loans, PL-480 and KFW (German) Loans, the State Bank
designates banks in U.S.A. and West Germany also for claiming payment or
reimbursement from the loan/aid giving agencies. Similar designation of
banks in the country of other aid giving agencies may also be made, if
necessary, under the aid/loan arrangements. 37.
Rates of Commission to be charged by Banks. (i)
Authorised Dealers may recover from the importers following charges:- (a)
Bank charges specified in and
remittable under the provisions of para 20 of this chapter and the amount of
interest, where authorised under loans like US AID Loans and others, payable
to the foreign banks handling the transactions at the other end. The amounts
of bank charges and interest as mentioned above may be remitted to the
foreign banks without the prior approval of the State Bank subject to report
on Form 'M'. (b)
Their own commission at rates
allowed by the Banking Supervision Department from time to time, if
applicable. In
respect of imports under Aids/Loans/Credits/Barters where the business is
handled through Authorised Dealers who are not designated banks, the
commission will be shared equally between the designated bank and the bank
handling the business on behalf of its customers. (ii)
Authorised Dealers may recover commission at the following rates on
letters of credit covering imports by the Government routed through State
Bank: (a)
In respect of cash/reimbursable loans/barters expressed in U.S. Dollar or
any other foreign currency including L/Cs under A.C.U. arrangement: aa)
1/8 % if the value of the letter of credit is less than Rs.250,000/- bb)
1/16 % if the value of the letter of credit is Rs 250,000/- or more. (b)
In respect of non-reimbursable
credits and Rupee Barters: 3/8 % irrespective of the value of the letter of
credit. The
above charges are inclusive of foreign correspondents charges. However, in
addition to the above, Authorised Dealers may recover actual cable/telex
charges where L/Cs are desired to be established through cable/telex and
confirmation charges of foreign bank if foreign bank's confirmation is also
to be added on opener's request. 38.
Special Features of various Aid, Loans and Credits. (i)
U.S.
AID LOANS: After the signing of the loan agreement, U.S. AID, Washington
issues letters of commitment which indicate the salient features of the loan
as also the names of designated Pakistani and American banks. U.S. AID loans
stipulate minimum monetary limits for the opening of each letter of credit
as well as the value of each shipment. They may, however, issue one letter
of commitment under each U. S. AID Loan. Goods are required to be shipped on
U.S./Pakistan flag vessels in accordance with the shipping requirements laid
down in respect of each loan. U.S. Liner Services are available on some
ports from where shipments can be made only on U.S. flag vessels. In cases
U.S. flag vessels are not available on these ports, shipments can be made on
Pakistan flag vessels or on the vessels of any other country which is
included in the AID Geographic Code 941 after obtaining waiver from the U.S.
AID. From ports where U.S. Liner Services are not available, shipments can
be made on Pakistan flag vessels or vessels of other countries included in
AID Geographic Code No.941. Two percent or ten percent of the freight amount
under U.S. AID Loans on 'Free-Out' and 'Non-Free-Out' basis respectively,
which is not financed by AID authorities, is paid from Pakistan's own
resources. (ii)
PL-480
PROGRAMME: Major food items like wheat, soyabean oil, tobacco and
non-fat dry milk are imported under Public Law 480. Banks are not designated
for import of wheat which is directly handled by the Ministry of Food. For
the remaining items, banks in Pakistan and the U.S.A. are designated for
handling imports. Payment to the suppliers is made directly by the Commodity
Credit Corporation (C.C.C.) of U.S.A. for which Procurement Authorisation (P.A)
is issued. Shipments are required to be made on Pakistan and U.S. flag
vessels on 50:50 basis. In the event of non-availability of U.S./Pakistan
flag vessels, shipments can be made on vessels of any other country at the
discretion of Commodity Credit Corporation. In case of shipments by Pakistan
flag vessels, Pakistani Shipping Companies can accept payment of freight in
Rupees without approval of the State Bank. In case of shipment on U.S. flag
vessels, permission of the State Bank for opening of freight letter of
credit/making remittance of freight is required in each individual case. (iii)
I.D.A.
CREDITS: Imports under I.D.A. Credits can be made from member countries
of I.B.R.D. (International Bank for Reconstruction and Development) and
Switzerland. Shipment is also required to be made on the vessels of member
countries of I.B.R.D. and Switzerland. There are different case procedures
for payments under I.D.A. Credits. (iv)
OTHER LOANS AND CREDITS: In respect of loans and credits other
than those mentioned above, which are provided by various countries,
specific instructions are issued by the State Bank from time to time for
handling imports and claiming reimbursements thereunder. (v)
ACU
CLEARING ARRANGEMENT: ACU Clearing Arrangement provides a clearing
system through which all eligible payments for current international
transactions among the member countries, other than payment relating to
travel, are compulsorily settled through the ACU mechanism which allows
payment in the AMU or the currency of the participating country in which one
party to the transaction resides. However, there is no bar to any contract
or letter of credit or invoice being denominated in Non-ACU Currency,
provided such contract/letter of credit invariably contains a clause to the
effect that payment of equivalent amount in ACU Currency/AMU shall be made
through the Clearing Arrangement and also specifies the manner in which the
currency of the contract/letter of credit will be converted into the
currency of actual payment/AMU. Payments for exports to member countries
against letters of credit established under loans/credits taken by the
importing country from the international financial institutions like World
Bank, Asian Development Bank etc., can be realised in convertible currency
outside the Clearing Arrangement. 39.
Foreign Currency Loans and Credits Negotiated by the Government of
Pakistan. Foreign
currency loans and credits negotiated by the Government of Pakistan with the
international institutions and other agencies are utilised for import of
machinery, capital goods, technical know-how, commodities etc. Such credits
negotiated for import of machinery, capital goods etc., are normally placed
at the disposal of public sector agencies (who use it by opening letters of
credit through the banks designated by State Bank of Pakistan or by
arranging direct disbursement by the lending agency) and the Development
Finance Institutions e.g. PICIC, NDLC and IDBP who in turn disburse them to
their constituents. The credits for import of commodities, raw materials,
spares etc., are normally disbursed through banks designated by the State
Bank against the allocations made by the Economic Affairs Division,
Government of Pakistan. Any other foreign currency credits negotiated
privately would require approval of the Federal Government/State Bank. 40.
Project Loans and Credits. In
respect of imports under Project loans, banks are also designated. Normally,
Authorised Dealers are advised to deliver shipping documents to the
importing agencies free of payment. 41.
Reimbursable Loans and Credits. In
case of reimbursable loans and credits, imports are financed in the first
instance from Pakistan's own foreign exchange resources and reimbursement is
obtained from the loan giving agency. In some cases imports are also
financed from Pakistan's cash foreign exchange resources pending signing of
the relevant loan agreement. As and when the loan agreement is signed,
reimbursement is to be sought expeditiously from the relevant Loan/Credit
giving agency. The procedures for obtaining reimbursement from the loan
giving agencies are worked out on loan to loan basis. 42.
Deposit of Counter-Part Rupee Funds with the State Bank in respect of
Foreign Non-Project Commodity Loans. The
designated Authorised Dealers will observe the following procedure for
deposit of counter-part Rupee funds: (i)
Appropriate Rupee amounts in respect of imports under all foreign
non-project commodity loans and credits on non-reimbursable basis will be
deposited with the regional office/branch of the State Bank within three
working days of the receipt of documents by the designated banks in Pakistan
or within 10 days from the date of negotiation by the bank abroad, whichever
happens to be earlier, at the rate of exchange prevailing on the date of
lodgement of documents in cases where no forward exchange is booked. Where
forward cover has been booked, the booked rate is applied for the purpose of
depositing Rupee funds. (ii)
The
designated Authorised Dealers will submit, to the concerned area Chief
Manager of the State Bank, a statement of Rupee deposits at the time such
deposits are made against foreign non-project commodity loans and credits in
the prescribed form (Appendix V-31). Copies of these statements will also be
sent to various Government agencies. 43.
Fine on delay in deposit of Counterpart Funds. In
the event of delay in depositing counterpart funds with the State Bank
within the prescribed period, the concerned Authorised Dealer will pay to
the State Bank fine at the rate of Rs 4 per day per Rs 10,000 or part
thereof for the period of delay. 44.
Documents received on Collection Basis due to Discrepancy/Documents
drawn on usance basis. (i)
In cases where the overseas negotiating bank does not make payment to
the supplier but sends the documents to the bank in Pakistan on collection
basis due to discrepancy in the documents, the Authorised Dealers will
deposit counterpart funds with the State Bank on retirement of the documents
by the importers concerned. The prescribed period for deposit of counterpart
funds will be reckoned as from the date of retirement of bill by the
importer. If the funds are held back by the Authorised Dealers beyond the
prescribed period, fine would be charged as per paragraph 43 ibid. (ii)
In those cases where the negotiating
banks make payment to the suppliers under reserve or guarantee due to minor
discrepancies in documents, either the documents should be sent back to the
negotiating bank or the counterpart funds deposited with the State Bank
within a maximum period of one week from the date of the receipt of the
documents. In case, however, the designated bank in Pakistan chooses to
retain the documents beyond the prescribed period of one week, a statement
of all such cases should be sent to the Director of Accounts, Economic
Affairs Division, Government of Pakistan, Islamabad and the concerned Chief
Manager of the State Bank showing the particulars of shipping documents and
indicating names and addresses of the importers, letters of credit numbers
and dates, vessel, commodity and foreign currency amount specifying the
detailed reasons for not depositing the amount within the prescribed period
of one week. The cases in which deposits are made within a week need not be
reported. (iii)
The designated Authorised Dealer is required to deposit counterpart
funds with the State Bank within the period specified in paragraph 42 ibid.
The letters of credit opened by the Authorised Dealers for imports under
Aid/Loans and Credits should not, therefore, provide for documents to be
drawn on usance basis. Documents with usance clause if received by an
Authorised Dealer will not be accepted by the State Bank as sufficient
reason for waiver of fine on account of delayed deposit of counterpart
funds. 45.
Deposit of Funds Received under Reimbursable Loans/Credits. In
case of loans and credits on reimbursable basis, the designated banks are
required to deposit funds in the State Bank's Account with the Federal
Reserve Bank, New York or with such other banks as may be specified from
time to time. The deposits should be made immediately on reimbursement by
the foreign loan/credit giving agencies but not later than the date
following that on which reimbursement is received. Late deposits will be
subject to payment of fine at rates given in paragraph 43 ibid. The
Authorised Dealers designated to open letters of credit for imports under
loans and credits should, therefore, make necessary arrangements in advance
with their correspondents abroad to effect the transfers within the
stipulated period. Late receipt or non-receipt of reimbursement advice by
the designated banks in Pakistan would not be accepted as sufficient reason
for waiver of fine. 46.
Exchange Facilities for Merchanting Business by Pakistan
Intermediaries. (i) Residents of
Pakistan and firms and companies functioning in Pakistan are allowed to
engage themselves in three way merchanting trade through back-to-back
letters of credit providing for payment in convertible currency or advance
payments excluding payments under bilateral/multilateral accounts, in
respect of the following commodities: 1.
Crude Oil 2.
Edible Oil 3.
Wheat 4.
Rubber 5.
Cotton 6.
Tea 7.
Sugar 8.
Fertilizer Authorised
Dealers are permitted to open letters of credit in favour of third country
exporters either against an irrevocable letter of credit on sight basis or
against advance remittance in convertible currency received from the
ultimate importer subject to the following conditions: a)
The price differential includes intermediary's commission at not less
than one percent, plus actual charges incurred on account of opening of
back-to-back letter of credit, buying and selling rates differential etc. b)
The letters of credit to be established by Pakistani intermediary in
favour of third country supplier will carry sufficient usance so that
payment becomes due only after receipt of payment from the importer. In case
where letters of credit are to be opened against advance remittance, the
condition of usance will not be obligatory. c)
The amount of foreign exchange representing the price differential
including commission will be converted into Pak rupees. d)
No commission or any other claim of whatsoever nature will be allowed
to be remitted from Pakistan. e)
No credit line such as export finance etc. will be available. f)
Goods will be shipped directly from the country of supply to the
country of import. g)
No forward cover facility will be available for trade under this
arrangement. However, if desired, the intermediary Pakistani trader can open
a "Special Foreign Currency Account" with an Authorised Dealer in
Pakistan for deposit of the proceeds of the letters of credit/advance
remittances received from the third country buyer pending (i) eventual
payment to the third country suppliers under the back-to-back letter of
credit stipulating reimbursement to the third country suppliers out of
Special Foreign Currency Account and (ii) conversion into Pakistan rupees of
the amount left out after making payment to the third country supplier
against back-to-back letters of credit. General
permission has been accorded to the Authorised Dealers for opening and
maintaining Special Foreign Currency Accounts for merchanting trade which
will be subject to the following terms, conditions and the procedure: aa)
The account will be fed exclusively through remittances emanating
either from the realisation of proceeds under an irrevocable letter of
credit opened by an overseas buyer for third country goods or advance
remittance made by such buyer for supply of third country goods. bb)
The account will be kept outside the scope of Foreign Currency
Accounts Scheme as embodied in paragraph 3 of Chapter VI of this Manual. In
other words the foreign currency received in such accounts will not be
required to be surrendered to the State Bank. Authorised Dealers can hold
such foreign currency abroad in addition to the normal balances held abroad.
cc)
Interest accruing on the balances held in the account will be
converted into and paid in Pak rupees. dd)
The exemption of interest income from levy of taxes etc. shall not be
admissible. After
payment for import under the back-to-back letter of credit, the Authorised
Dealer will prepare a statement in the format appearing at Appendix V-32
matching the receipt and payment for each merchanting transaction
individually and will submit the same to the concerned area office of the
Exchange Policy Department. The reporting of inward and outward remittances
would be as indicated in the format appearing at Appendix V-33. (ii) It is also permissible to conduct three-way merchanting trade in commodities other than those mentioned in sub-para (i), subject to the same terms and conditions, except that the margin to be retained by the Pakistani intermediary which includes his commission and expenses, is not less than (a) 10%, if the sale price is to be received from the foreign buyer before remittance of the purchase price is made to the overseas supplier of the goods, and (b) 15% if back-to-back letter of credit provides for payment to be made to the overseas supplier of the goods before receipt of remittance from the overseas buyer. |
