business
Friday Oct 22 2021
By
BDBusiness Desk

Exchange firms face technical issues in implementing SBP's foreign exchange law

By
BDBusiness Desk
Bundles of banknotes of US Dollar are pictured at a currency exchange shop in Ciudad Juarez, Mexico January 15, 2018. — Reuters/File
Bundles of banknotes of US Dollar are pictured at a currency exchange shop in Ciudad Juarez, Mexico January 15, 2018. — Reuters/File

  • Exchange Companies Association says the biometric verification system of exchange companies is not linked to NADRA.
  • SBP had announced that exchange companies will have to conduct biometric verification for all sale transactions equivalent to $500.
  • The central bank had taken these measures to curb the "undesirable" outflow of foreign currency.


KARACHI: Following directives issued by the State Bank of Pakistan (SBP), the foreign exchange sale law has been enacted, however, foreign exchange firms are facing technical issues in implementing it, Exchange Companies Association General-Secretary Zafar Paracha said on Friday.

The central bank had announced that exchange companies will be required to conduct biometric verification for all foreign currency sale transactions equivalent to $500 and above and outward remittances.

However, according to Exchange Companies Association, the biometric verification system of exchange companies could not be linked to National Database and Registration Authority (NADRA), and thus the process cannot currently be carried out.

Paracha said money changers are for the time being not selling more than $500.

Meanwhile, according to NADRA officials, they have prepared a solution for monitoring the foreign exchange transactions.

The officials said that 24 out of the 51 exchange rate companies have sent solutions along with a written agreement.

"19 companies contacted NADRA after which the system was explained to them, however, these 19 companies did not return due to lack of IT infrastructure and capacity," NADRA said.

Keeping in view the difficulties faced by companies, NADRA has now developed a mobile app, revealed the officials.

"Work on the mobile app pilot project is underway," NADRA officials said, adding that some companies are testing the app.

They added that biometric devices with the mobile app will also be given to exchange companies.

"The entire process of buying and selling currency will be monitored through the app," NADRA said.

The central bank took these measures to curb the "undesirable" outflow of foreign currency.

The decision was taken by the SBP in the wake of constant depreciation of the local currency against the US dollar. The Pakistani currency touched a new all-time low of Rs174 against the US dollar in the inter-bank market today.

Through the implementation of the new measures, the central bank aims to enhance transparency in foreign currency transactions by exchange companies.

According to the central bank, from now on, travellers to Afghanistan will be allowed to carry only $1,000 per person per visit, with a maximum annual limit of $6,000.

The central bank said that exchange companies will sell the foreign currency in cash and make outward remittances, equivalent to $10,000 and above, against receipt of funds through cheque or banking channels only.