Circulars/Notifications - Exchange Policy Department  
 F.E. Circular No. 54
June 07, 1992 

All Authorized Dealers in
Foreign Exchange,
Investment Banks, DFIs
Authorized to accept
Foreign deposits,

Dear Sirs,


Under the present arrangements the foreign exchange, in respect of foreign currency deposits mobilized under (I) Private Foreign Currency Accounts Scheme by Authorized Dealers (ii) under F.E. Circular No.45 of 1985 as amended from time to time (iii) deposits mobilized by the Investment Banks under F.E. Circular No.36 of 1992 and (iv) deposits mobilized by the Development Finance Institutions/Non-Bank Financial Institutions under specific permission granted by State Bank of Pakistan is required to be surrendered to the State Bank. In return the State Bank gives to the institution surrendering the foreign exchange equivalent Pakistan Rupees at the rate prevailing on the date of surrender. The concerned institutions are entitled to receive back from the State Bank the amount of foreign exchange surrendered at the same rate at which it was surrendered to the State Bank. In other words, the State Bank assumes the exchange fluctuation risk.

2. Keeping in view the spread available to banks etc. based on the interest rates which they have to pay at present in respect of US Dollar and the Japanese Yen and the return which they earn on the employment of the rupees generated by the surrender of these currencies, it has been decided that the State Bank shall recover a forward cover fee at the rate of 3% per annum on forward cover provided in respect of foreign currency deposits in US Dollar and Japanese Yen accepted/renewed/rolled over on or after 1st July, 1992. The revised Scheme shall be subject to the following rules./requirements:-

  1. The rates of interest payable on the foreign currency deposits would continue as at present or as may be modified from time to time by the State Bank. In other words, no change is to be made in the rates of interest payable on such foreign currency deposits as a consequence of the said fee.

  2. It will be optional for the institution obtaining/renewing/rolling over the foreign currency deposits under reference to obtain forward cover from the State Bank or to carry the risk itself.

  3. The present requirement of surrender of foreign exchange in respect of foreign currency deposits to the State Bank will continue regardless of forward cover being obtained or not.

  4. The existing arrangements in respect of foreign currency deposits of other than US$ & J.Yen will continue as at present.

  5. Where you opt to obtain forward cover in respect of US$ and J.Yen term deposits, the aforesaid fee for the relevant tenure shall be paid by you to State Bank of Pakistan alongwith the request for forward cover at the time of surrender of foreign exchange/renewal/roll-over. As for savings and current deposit accounts, fee at the prescribed rate will be paid by you at quarterly rests at the time of surrender of the amount of deposit/renewal of previous forward cover contract. As for call deposits, the said fee will be payable at the monthly rests.

  6. The rate of fee will be reviewed from time to time keeping in view the rates of interest obtaining in the international markets and the rates of return in Pakistan and such revision will apply prospectively and to deposits accepted/renewed/rolled over on or after the effective date that may be notified while revising the fee in question.

3. While applying for forward cover to the concerned office of the State Bank of Pakistan, you will furnish the details of surrenders/renewals/roll-over & calculation of fee in the proforma "Annexure 'A' " together with cheque/debit authority for the forward cover fee.

Please acknowledge receipt.

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