Authorized Dealers in
BORROWINGS IN PRIVATE SECTOR INCLUSIVE
OF SUPPLIERS’ CREDITS/GUARANTEED LOANS ABSORPTION
EXCHANGE RISK BY THE GOVERNMENT AGAINST PAYMENT OF FEE
of the Authorized Dealers is invited to F.E. Circular No.24
of 1989 in terms of which borrowers have been given an option
to take the exchange risk coverage either from the date
of opening of letter of credit or from the date of disbursement.
In cases where the cover is taken from the date of disbursement,
conversion of foreign currency amounts of the loan/interest
for fixing the liability of the borrowers into Pakistan
rupees is made at the Authorized Dealers T.T. &
O.D. Spot Selling rate obtaining on the date of disbursement.
Instances have come to our notice where the borrowers obtain
exchange risk coverage from the date of disbursement, retain
the amounts in foreign currency accounts for the purpose
of import of plant and machinery but dont fully utilize
the amount for the declared purpose and transfer a part
of the funds from foreign currency accounts to Pakistan
in cash. It is clarified that in such cases exchange risk
coverage can be availed only from the date the exchange
risk is taken by the borrower by converting the amount into
rupees and for this purpose the Authorized Dealers
Spot T.T. Clean buying rate obtaining on the date rupee
encashment proceeds are paid to the borrowers by the Authorized
Dealer will be applicable. In such cases, exchange risk
coverage fee will also be payable from the date of conversion
of foreign exchange into Pakistan rupees.
Please bring the above to the notice of your constituents.