The Head Offices/Principal Offices of all
Authorized Dealers in Foreign Exchange
Dear
Sir/Madam,
Local
US Dollar Instruments Collection and Settlement System
With the liberalization of the foreign currency regime in
the country, and to facilitate operations for maintaining
Foreign Currency Accounts under FE-25, State Bank of Pakistan
is pleased to introduce “Local US Dollar Instruments
Collection and Settlement System” in Pakistan with
effect from March 11, 2004. Presently, the clearing process
has to be routed through New York which takes a long time
in settlement and the cost of the above process is also
quite high for the account holders. The key objectives of
this new system are quick settlement locally, cost effectiveness
and facilitation of the market.
Scope
and Salient Features of “Local US Dollar
Instruments Collection and Settlement System”:
Instruments
All
financial instruments (cheques, drafts etc.) denominated
in US$ drawn on bank branches (in cities as appear in the
coverage list below) in Pakistan will be acceptable for
this settlement system.
Coverage
The
bank branches in the following cities will participate in
the Local US Dollar Instruments Collection and Settlement
System:
1) Karachi 2) Lahore 3) Islamabad 4) Rawalpindi 5) Faisalabad
6) Multan 7) Sialkot 8) Peshawar 9) Quetta 10) Mirpur
11) Hyderabad
Collection
from all other cities will be arranged/managed by each bank,
by making internal arrangements, through any one of the
above cities.
(Addition of more cities within the ambit of the above settlement
system will be considered in due course, depending on the
requirements and the facilities for collection of instruments
through courier services)
Collection
& Settlement Schedule
-
Initially there will be two collection and settlement
days per week, i.e. Monday and Thursday.
-
If
a collection / settlement day happens to be a bank holiday,
then it will be skipped till the next collection/ settlement
day.
-
Each
bank will designate a branch/Regional/ Head office in
Karachi for presenting outward and receiving inward instruments
for collection and settlement through M/s National Institutional
Facilitation Technologies (Pvt.) Ltd. (NIFT).
-
NIFT
will deal with only one designated office of each bank
in Karachi for settlement of Karachi and upcountry branches.
-
Each
bank may also designate one branch in each city (i.e.
from the coverage list) with whom NIFT and the designated
branch of that bank in Karachi, if required, would liaise
for issues regarding collection & settlement relating
to other branches in that city.
Mandatory
Settlement
It
will be mandatory for the banks operating in Pakistan, whose
Head Offices or branch offices are located in Karachi:
-- To be a member of this system.
-- To open US$ settlement account with a minimum balance
of US$ 10,000/- for settlement with SBP BSC(Bank) Karachi
and thereafter to maintain sufficient balance to cater to
the requirements keeping in view their business volume.
The said account will be remunerated on the same interest
rate as for SCRR for FE-25.
-- To settle payment of US$ instruments drawn on them through
this system or to return unpaid instruments on settlement
date.
In
case the paying bank does not return the original instrument
on the settlement date to the presenting bank, it will be
assumed that the instrument has been accepted for payment
and will be settled through this system accordingly.
Processing
Cycle
-
The collection/settlement will be centralized at Karachi.
NIFT will interface with one designated branch of each
bank in Karachi only.
-
Banks
will route all inward/outward instruments from their branches
in Pakistan through their designated branch in Karachi.
-
NIFT will collect/deliver all instruments for inward/outward
settlement from the designated branches of Banks in Karachi,
process the collection/settlement and deliver a consolidated
statement to the respective designated branch of the bank.
-
Each
designated branch in Karachi will forward the instruments
received in inward collection to the payee branch of their
bank directly for ‘Acceptance’ or ‘Return
unpaid’.
-
The
payee branch will settle or return the original instrument,
if any, to the designated branch in Karachi. NIFT will
collect all return instruments from the designated branches
in Karachi, process them alongwith inward collection and
then route them to the related designated presenting Bank
branch in Karachi.
-
The
Settlement proceeds of the instruments would be communicated
to the concerned branch immediately by electronic or any
other means on the same day for crediting to the concerned
depositor’s account.
Date
Stamp
The
Collecting Bank will affix the stamp of the date on which
outward instruments would be sent to NIFT for collection.
Settlement
The net settlement will take place by debiting or crediting
the respective banks’ US Dollar clearing accounts
on settlement date.
Settlement
Statements
NIFT will provide a statement of collection / settlement
statistics on monthly basis to ascertain the expenses payable
by the lodging bank to paying bank at the rate of Rs. 100/-
per instrument (for cheques drawn on cities other than Karachi)
irrespective of whether the instruments are paid or return
unpaid.
All other reports and information will be produced and provided
on the existing pattern as for rupee clearing.
NIFT
will provide stationery and usual collection / settlement
preparation material to the branches as is being done for
PKR clearing systems.
Forced
Retention
If
for some unavoidable reasons the relevant bank is unable
to provide a returned cheque on the specific collection/settlement
date due to any reason beyond control, the designated bank
office in Karachi will provide to the concerned bank alongwith
inward clearing instruments, with a copy to NIFT, a document
on prescribed format (agreed between the banks and NIFT)
giving details of the instrument, undertaking that the said
instrument will be provided to the lodging bank directly
on availability but not later than the subsequent collection
/ settlement date, that instrument will be considered as
returned unpaid.
This
process may function in a manner such that the designated
bank will furnish the prescribed document in duplicate to
NIFT in place of the returned document and NIFT will send
the first copy to the lodging bank along with other returns,
if any, as a return instrument.
Settlement
In Case Of Insufficient Balances
At
any point in time when the net debit (inward & outward)
cannot be paid out of a bank’s US Dollar clearing
account (due to insufficient balance) held with SBP BSC(Bank),
Karachi, the State Bank reserves the right to adopt a suitable
alternate. This will primarily take the shape of payment
through an appropriate overnight SWAP from the Pak Rupees
clearing account balance of the bank with SBP to the extent
of such shortfall in US Dollar account.
SWAP
Limit for every Bank is being advised to each bank individually.
Settlement
Charges
NIFT will charge the presenting bank Rs.100/- per instrument
for its services and Rs.100/- for processing a return instrument.
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