Section
4(2) of the Foreign Exchange Regulation Act, 1947 provides
that 'except with the previous general or special permission
of the State Bank, no person whether an Authorized Dealer
or otherwise, shall enter into any transaction which provides
for the conversion of Pakistani currency into foreign
currency or foreign currency into Pakistani currency at
rates of exchange other than the rates for the time being
authorized by the State Bank'. In implementation of the
above provisions of this Act, State Bank of Pakistan had
authorized the Foreign Exchange Rates Committee to daily
publish the rates of exchange of various currencies in
terms of Pakistan Rupees calculated in accordance with
the formula approved by the Bank.
2.
It has now been decided that effective 5th
February 1998 Foreign Exchange Rates Committee will not
publish the exchange rates of various currencies other
than the U.S. Dollar, in terms of Pakistan Rupees. General
permission is hereby granted to the Authorized Dealers
to determine their own rates of exchange for various currencies,
other than US$ in terms of Pakistan Rupees and undertake
transactions at these rates. The exchange rate of U.S.
Dollar in terms of Pakistan Rupees will continue to be
determined and published by the State Bank of Pakistan
as hithertofore.
3.
In view of the permission being given to the Authorized
Dealers for determining their own rates of exchange, it
has been decided to de-link the purchase of foreign exchange,
other than US$, by the importers from the relative letter
of credit / registered agreement etc. In other words,
importers would be free to purchase the amount of foreign
exchange required for payment of import bills form any
authorized dealer in Pakistan and deliver it to the authorized
dealer which had opened the letter of credit / registered
the Agreement etc.
4.
At present, importers can obtain forward covers only from
those Authorized Dealers through which they get the letters
of credit opened or with which they get the agreements
/ contracts / proforma invoices / purchase orders / indents
etc registered. The facility of forward covers for purchase
of currencies other than US$ is also de-linked from the
opening of letter of credit / registration of contracts.
In other words, it will not now be necessary for the importers
to obtain forward covers from the same bank through which
they open letters of credit or with which they get the
contracts registered. In case the importer makes a request
to an Authorized Dealer for booking of forward cover which
has not opened the letter of credit / registered the agreement
contract / proforma invoice / purchase order / indent
etc, the concerned Authorized Dealer will book the forward
cover on the basis of a certificate from the bank opening
the letter of credit / registering the contract containing
particulars of the letter of credit / contracts, the name
and address of the importers, name and address of the
foreign suppliers, the amount of letter of credit / contract,
validity of the letter of credit for shipment, etc. The
importer will arrange with the Authorized Dealer booking
the forward cover to give delivery of the required amount
of foreign exchange to the Authorized Dealer opening the
letter of credit / registering the agreement / contract
/ proforma invoice / purchase order / indent etc.
5.
In case the importers fail to arrange delivery of foreign
exchange by the Authorized Dealer booking the forward
cover / selling foreign exchange to the importers in ready,
where no forward booking is involved, to the Authorized
Dealer opening letter of credit / registering the relative
contract / indent / purchase order / proforma invoice,
the latter Authorized Dealer will be free to make rupee
recoveries from the importers at the applicable rate of
exchange.
6.
The Authorized Dealer giving delivery of the foreign exchange
under the forward cover booked by it / ready sale to the
importers will report the transaction on Schedule
'G' (APP-V-117)
while the Authorized Dealer receiving the amount will
take the amount involved in its Nostro account and will
report the transaction on Schedule
'C' (APP-V-114).
The Authorized Dealer opening the letter of credit / registering
the contract / indent / purchase order proforma invoice
and receiving the foreign currency from the Authorized
Dealer who had booked at forward cover / made ready sales
to the importers will also report the transaction on form
'I' Schedule
' EL-2 / EL-3'
7.
Likewise, in the case of exports the Authorized Dealer
which had handled the documents will advise the exporter
immediately on payment of the bill by the drawee and the
exporter would be free to sell the foreign currency to
the bank handling the documents or to any other Authorized
Dealer. In the latter case, Authorized Dealer receiving
the payment from the drawee will transfer the proceeds
of the bill to the correspondent of the Authorized Dealer
named by the exporter, after deduction of its charges,
if any, and subject to satisfactory arrangement for recovery
of export finance if any. The Authorized Dealers are also
free to enter into any other arrangement with their client
which would ensure, interalia, freedom for the exporter
to sell the export proceeds at the best available rate.
The transaction will be reported on Schedule
A-1 / 0-1 by the Authorized Dealer to which the foreign
currency is actually sold by the exporter and who will
also issue the EPRC.