Please refer to FE Circular No. 12 dated May 29, 1999, in terms of which aggregate Foreign Exchange Exposure Limit of scheduled banks was set as 10% of their Paid-up Capital, under which they were asked to conduct their foreign exchange operations.

2. To further enhance the capacity of Authorized Dealers in order to manage increased volume of FX Market and to match future demand in the wake of growth in trade volumes, it has been decided to revise the Foreign Exchange Exposure Limit from April 02, 2007. Accordingly, new aggregate Foreign Exchange Exposure Limit of scheduled banks would now be calculated as 15% of their Paid-up Capital, with a maximum cap of PKR 1,500 million. The assigned capital required to be maintained by branches of foreign banks in Pakistan under section 13 (3) of Banking Companies Ordinance 1962 shall be deemed paid up capital for the purpose of this circular. In the case of banks incorporated in Pakistan the limit would cover all the branches including overseas branches if any.

3. The guidelines for calculating the exposure limit as conveyed in Para 4 of the aforesaid circular would remain unchanged.

4. In case of increase in paid-up capital of a bank, it may apply for the enhancement of its exposure limit to the State Bank of Pakistan.

5. New exposure limits would be advised to each bank individually through separate letters.

6. Please acknowledge receipt.