The State Bank of Pakistan (SBP) has suspended the authorization of five exchange companies over serious violations of SBP’s regulations & instructions.
These exchange companies can no longer undertake any kind of foreign exchange-related business activity during the suspension period.
In response to growing concerns over foreign currency smuggling and illicit hawala-hundi operations, Pakistan’s State Bank (SBP) has introduced a series of robust measures aimed at overhauling the currency exchange industry. Companies categorized as ‘B’ in the sector have been issued a three-month ultimatum to either transform into full-fledged exchange firms or risk losing their licenses.
The move by the SBP addresses issues with the operational structure and compliance levels observed within category ‘B’ exchange companies. The central bank’s directive urges both ‘B’ firms and franchisees to either merge with established full-fledged entities or sell their businesses to stronger counterparts. Failing to comply within the stipulated three-month timeframe will lead to the automatic cancellation of licenses for standalone category ‘B’ firms.
Additionally, the SBP has opened the door for leading banks to “establish wholly owned exchange companies to cater to the legitimate foreign exchange needs of the general public,” as outlined in a circular.
Previously, the Exchange Companies Association of Pakistan (ECAP) raised concerns with the SBP about plainclothes policemen visiting exchange companies in Gujranwala, alleging law violations and unwarranted monitoring of currency transactions.
In a separate circular, the SBP has mandated that exchange companies increase their paid-up capital to a minimum of Rs500 million (excluding losses) by December 31, 2023, up from the current minimum requirement of Rs200 million.
