Circulars/Notifications - Exchange Policy Department  
 F.E. Circular No. 05
May 13, 2000 

All Authorised Dealers/
Shipping Companies in

Dear Sirs,


It has been decided to delegate to the Authorized Dealers, the powers to allow remittance of surplus freight collections of foreign shipping companies voyage-wise. Consequently, the following is added as sub-paragraph (iii) of paragraph-1, Chapter XIV of the Foreign Exchange Manual. The existing sub-paragraphs (i) and (ii) are renumbered as sub-paragraph (ii) & (i) respectively:-

Remittance on account of surplus freight companies/local to foreign ships owners/operators. 1.(iii) As an exception to the instructions contained in sub-paragraph (ii) above, foreign shipping agents of foreign shipping companies desiring to remit surplus freight without prior approval of SBP may designate an Authorized Dealer and approach SBP through it for such permission. SBP , after ensuring that the agent holds necessary lenience from Customs and that agency agreement between the principal and the agent is registered with the Board of Investment, will authorize the concerned Authorised Dealer to remit surplus freight on production of the following documents in addition to the documents mentioned in sub-paragraph(i) above:-

i)Statement on Form "FP-Shipping" (App.V-46A) along with Import/Export freight manifest, copies of relative Bills of Lading and other documentary evidence/appendices in accordance with the procedure laid down in Para 2 Chapter XIV of the Manual.

ii)Copy of valid permission from BOI for representing the foreign principal to whom or to whose order remittance is being made.

iii)Auditors certificate for payment of income tax at the applicable rate or of having obtained exemption certificate covering the remittance from the Income Tax Authorities.

iv)An undertaking from the agent duly certified by the designated AD to the effect that any irregularity detected and advised by SBP shall either be rectified within 7 days of receipt of such advice by submitting the requisite documents or by repatriating to Pakistan the amount remitted through normal banking channel.

2. Authorised Dealers will allow remittance of the surplus freight of the ships voyage-wise for an amount not exceeding the amount mentioned in the last column of the statement of FP-Shipping (App.V-46-A)and shall ensure that whole disbursement whether paid or due but not paid and amount of freight not yet collected are duly deducted from the freight collections. The Authorised Dealers will also ask the applicant to ensure regular submission of monthly statement of FP-Shipping (App.V-46-A) and disbursement statements in respect of all vessels handled by it on behalf of its foreign principals.

3. Authorized Dealers will submit the above documents along with a photocopy of Form ‘M’ for post facto checking within 3 days of remittance to the Joint Director,Foreign Exchange Department, State Bank of Pakistan, Central Directorate, Karachi under a covering letter. The original Form ‘M’ shall be submitted as usual through schedule E-4 while reporting the transaction in their monthly Foreign Exchange Returns. Any irregularity detected and and advised by the State Bank shall be rectified within 7 days of receipt of such advice failing which the amount remitted against such booking will be required to be repatriated to Pakistan through normal banking channel. It will be the responsibility of the designated ADs to ensure that letter through which the irregularities pointed out by SBP are responded to by them along with requisite documents and where documents are not supplied, by encashment certificate in token of having repatriated and encashed the amount with an Authorized Dealer.

4. Following amendments in Chapter XIV of the Foreign Exchange Manual are also made:-

  1. In line 4 of Pare 1(ii) (formerly 1(i) "Full stop" will be omitted and following words/sentence will be inserted:

    "and other statements/documents mentioned in sub-Para(i) above. A separate statement of Form FP-Shipping (Specimen enclosed as App.V-46-A) shall be used for remittance purpose".

    ii) Para-2 will be replaced as under:-

    2- "Shipping Companies/Airlines may accept freight in rupees only in the under noted cases without the prior approval of the State bank:-

a) Export from Pakistan made on C&F/CIF basis against form ‘E’ duly certified by ADs on their letterheads in terms of Para-27 Chapter XII of Foreign Exchange Manual.

b) Import freight on FOB basis:-

i) Against Ads certificate on their letterhead on Form prescribed in Appendix V-24 in terms of Para-11 Chapter XIII of the Manual.

ii) Against SBP’s approval for import on FOB basis in public sector in terms of Para-12 Chapter XIII of the Manual.

iii) Against certificate of registered importers for freight on Import of Trade sample not exceeding Rs. 500/- per year in terms of Para-14 Chapter XIII of the Manual.

c) Freight on personal effects/excess baggage in accordance with the procedure laid down in paras (40 (a) & 40 (c) Chapter XVII of the Manual.

d) Freight on Export Trade sample in accordance with the procedure laid down in Para 40 (b) Chapter XVII of the manual.

In all other cases prior approval of the State Bank should be obtained before collecting freight in Rupees. For this purpose, applications should be made to the State Bank giving the nature of the transactions and the reasons why freight cannot be paid in foreign currency.

Summary Statement to be submitted
(Downloadable in MS-Excell Format)

Yours faithfully,
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