Exchange Policy Department (EPD), being one of the core departments of State Bank of Pakistan, is primarily responsible for defining and regulating Pakistan’s foreign exchange regime. In this regard, the department is responsible for overall stability of the foreign exchange market and is engaged in a continuous process of policy formulation and implementation to bring the country’s exchange regime in line with Federal Government’s and SBP’s policies objectives.
The Exchange Policy Department, being part of the Banking Policy and Regulations Group, reviews on continuous basis, the existing rules and regulations, to facilitate foreign exchange activities in the country. Foreign exchange business in Pakistan is governed/regulated under Foreign Exchange Regulations Act, 1947 (FERA, 1947). Foreign Exchange Manual outlines the rules and regulations governing foreign exchange business in the country for the guidance of Authorized Dealers (ADs), Exchange Companies (ECs) and general public including local/foreign investors as well as other stakeholders. The changes in instructions/policies/procedures are brought through F.E. Circulars/Circular Letters. EPD lays down policy measures in consultations with relevant Government departments, Ministries, various trade bodies, chambers and other stakeholders.
In order to achieve its goals of maintaining stability in the foreign exchange market, the Department is actively involved in the formulation and implementation of policies relating to exports/imports, foreign currency accounts, forward cover facility, private/public sector inflows/outflows, etc. The Department also advises the Government and other Departments on issues related to Trade Policy, WTO, Free Trade Agreements, Investment Policies, Bilateral Investment Treaties as well as matters pertaining to regional bodies such as ACU, ECO, SAARC, etc.
Exchange Policy Department also formulates policies for licensing, regulating and effective monitoring of Exchange Companies with the objective of ensuring stability of forex market. In addition, it works for facilitation and enhancement of Home Remittances through formal channels by way of providing policy guidelines and support to the stakeholders. The Department also actively coordinates with the Law Enforcement Agencies to contain illegitimate foreign exchange businesses in the country.
The Department is also responsible to facilitate implementation and compliance of the Government policy for capital account transactions including foreign direct investment, foreign currency loans and guarantees by private sector, making investment abroad, etc.
Further, compliance of foreign exchange regulations by ADs, rectification of irregularities and enforcement of actions based on on-site inspection reports also come under ambit of EPD. In this regard, appropriate penal actions are taken.