The Chief Executives of all

Exchange Companies

Dear Sir/Madam,

Statutory Liquidity Reserve (SLR)

1. Attention of all Exchange Companies is invited to the instructions contained in Para (3), Chapter (3) of the Exchange Companies Manual whereby Exchange Companies are required to maintain 25 percent of Paid-up Capital as Statutory Liquidity Reserve (SLR) with the State Bank of Pakistan (SBP). The amount of SLR may be kept in current account maintained with SBP as well as invested in unencumbered approved government securities through SBP’s Subsidiary General Ledger Account (SGLA) facility.
2. In order to facilitate Exchange Companies in managing their liquidity and enhance their business profitability, the requirement of SLR has been decreased from 25% to 15% of paid-up capital of Exchange Companies.
3. Accordingly, the related instructions contained in the following paras of Exchange Companies Manual stand replaced, as under:

i. Para (3) of Chapter (3)

“Fifteen (15) percent of the paid-up Capital shall be maintained as Statutory Liquidity Reserve (SLR) with the State Bank in the form of cash and/or unencumbered approved government securities. State Bank would extend current account and SGLA facilities to Exchange Companies.”

ii. Sub-para (ii)(f) of Para (2) of Chapter (4)

“Franchise Deposit’ is treated as “Second Tier Capital” in the books of the Franchiser. For the purpose of calculation of 15% SLR requirement and 50% of the Exposure Limit, this “Second Tier Capital” is added to the paid up capital of the Franchiser. At any point of time, combined exposure of Franchiser and Franchisee should not exceed 50% of the sum of paid up capital and Second Tier Capital (Franchise Deposit) of the Exchange Company.”

4. All other instructions on the subject shall remain unchanged.