Foreign Exchange Manual, 2000

For business information, annual reports, laws, ordinances, regulations and articles.

1. Foreign Exchange Regulation Act 1947, and Notifications issued thereunder:-
Exchange Control in Pakistan is administered under the provisions of the Foreign Exchange Regulation Act, 1947. The object of this Act is to regulate in the economic and financial interest of Pakistan certain payments, dealings in foreign exchange and securities and import and export of currency and bullion. Under the Act, the basic regulations are issued by the Government of Pakistan and the State Bank in the form of Notifications which are published in the official Gazette. The Act, as amended up-to-date, is reproduced at the end of the Manual as Appendix I. Notifications issued by the Government of Pakistan and the State Bank under the Act, as amended up-to-date, are reproduced as Appendices II and III respectively.

2. Directions issued under the Act:-
For the purpose of securing compliance with the provisions of the Act and the Notifications and any rules, orders or directions issued thereunder, the State Bank may, under sub-section 3 of Section 20 of the Act, give directions to Authorised Dealers, travel agents, carriers, stock-brokers and other persons who are authorised by the State Bank to do anything in pursuance of the Act in regard to making of payments and doing of other acts in the course of their business. Directions having general application are issued in the form of public notices, circulars and circular letters etc. Instructions issued by the State Bank to the Authorised Dealers, travel agents, stock-brokers etc., upto 31st March, 1992 setting out the terms and conditions subject to which they may engage in transactions covered by the Act have been incorporated in this Manual. Contents of this Manual and all instructions, directions, orders etc., issued under the Act are without prejudice to the provisions of any other law of Pakistan or any rules, notifications, orders, directions or regulations made thereunder.

3. Amendments:-
Changes in the regulations are generally advised by issue of F.E. and S.P.A. Circulars. This edition of the Manual has been issued in the loose -leaf form. Amendments in the provisions of the Manual will be printed periodically by the State Bank in the form of replacement pages which will be substituted in place of the old pages, it will be in the interest of Authorised Dealers and other holders of the Manual to ensure that it is kept up-to-date and the old pages are regularly replaced by new pages whenever they are issued.

4. Jurisdiction of the Offices of Exchange Control:-
Under the Act, the State Bank is responsible for day to day administration of Exchange Control which is exercised through its Exchange Control Department. The Principal Office of the Department is situated at Karachi under the charge of a Director. The Department has offices at Karachi, Hyderabad, Quetta, Lahore, Faisalabad, Rawalpindi, Islamabad, Peshawar, Sialkot, Multan, Gujranwala, D.I. Khan and Sukkur. Jurisdiction of each Office is given below:

(1) Senior Deputy Director, Karachi:
Karachi Division.
(2) Senior Deputy Director, Hyderabad:
Hyderabad Division.
(3) Senior Deputy Director, Sukkur:
Sukkur Division.
(4) Senior Deputy Director, Quetta:
Quetta, Kalat, Sibi and Mekran Divisions.
(5) Senior Deputy Director, Lahore:
Lahore Division.
(6) Senior Deputy Director, Faisalabad:
Faisalabad and Sargodha Divisions.
(7) Senior Deputy Director, Sialkot:
Sialkot District.
(8) Senior Deputy Director, Multan:
Multan [ ] and Dera Ghazi Khan Divisions.
(9) Senior Deputy Director, Rawalpindi:
Rawalpindi Division and Azad Kashmir.
(10) Senior Deputy Director, Islamabad:
Federal Capital Area of Islamabad.
(11) Senior Deputy Director, Peshawar:
Hazara, Kohat, Malakand and Peshawar Divisions.
(12) Assistant Director, Gujranwala:
Gujranwala Division, excluding Sialkot District.
(13) Assistant Director, D.I. Khan:
Dera Ismail Khan Division.
(14) Assistant Director, Bahawalpur;
Bahawalpur Division.

5. Authorised Dealers to notify the Regulations to their Customers and to report Cases of Evasion :-
Authorised Dealers are required to bring the Exchange Control regulations to the notice of their customers and to ensure their compliance in their day to day operations. They should also report to the State Bank every case of evasion or attempt, direct or indirect, at evasion of the provisions of the Act and Notifications or any rules, orders or directions issued thereunder, immediately it comes to their notice.

6. References to the State Bank :-
Authority has been delegated to the Authorised Dealers to approve certain transactors on behalf of the State Bank. In these cases, Authorised Dealers should, before approving any transactions, satisfy themselves about the bonafides of the applicant and the genuineness of the transaction by verifying the necessary documents. They should refer to the State Bank along with their recommendations/comments only those cases which they are not authorised to approve. While referring cases to the State Bank, they should ensure that the applications are on the prescribed forms, wherever such forms are prescribed and are supported by appropriate documentary evidence. In all these cases it will be deemed that they have satisfied themselves about the bonafides of the applicants and the correctness of the statements made by them on the application and the accompanying documents, if any.

7. Submission of Returns to the State Bank :-
Authorised Dealers must submit to the State Bank returns of their dealings in foreign exchange on due dates in the forms prescribed in Chapter XXII. Specimens of all application forms and returns prescribed by the State Bank are given in Appendix V.

8. Stationery :-
(i) Forms M, T-I, E and I will be got printed by the Head/Principal Offices of the Authorised Dealers themselves in red, blue, green and black colours respectively, strictly according to the size, contents and format of the specimens supplied to them by the State Bank. These forms should bear an identifying prefix as per Appendix IV followed by serial numbers in six digits except in the case of form 'E' which will have seven digits. For example, the first number of all the forms printed by XYZ bank except form 'E' will be "XYZ OOOOOI" (i.e. six digits) and so on and in the case of form 'E' the serial number will be "XYZ OOOOOOI" (i.e. seven digits) and so on.
(ii) As omission of any part in the printing of the forms is likely to make a material change and may weaken the position of the State Bank legally, Authorised Dealers should take utmost care in the printing of the forms. They should also keep an up-to-date record of the forms printed and distributed to their branches which should be kept adequately stocked to avoid any complaint on account of non-availability of the forms.
(iii) In regard to other forms which are at present printed and supplied by the State Bank, Authorised Dealers may have these forms printed themselves if they so desire, but in that event these must conform exactly in size, content, colour and format to the respective forms supplied by the State Bank.

9. Definitions:-
Terms having special meanings for the purposes of the Act have been defined in Sections 2 and 13 of the Act.--
(a) For the purposes of Section 13 of the Act the term "persons resident outside Pakistan", covers a foreign national including foreign nationals of Indo-Pak origin as also Pakistanis holding dual nationality for the time being resident in Pakistan. A company registered in Pakistan which is controlled directly or indirectly by "persons resident outside Pakistan" is, for the purposes of Sections 13 and 18 of the Act, treated as a "Person resident outside Pakistan".
(b) For the purposes of Section 5 of the Act the term "persons resident outside Pakistan" also includes nationals of Pakistan and persons domiciled in Pakistan excepting persons holding office in the service of Pakistan, who go out of Pakistan for any purpose.
(c) In respect of purposes other than the above, a resident person, bank or firm is a person who resides in Pakistan. A non-resident is a person, bank or firm, who resides outside Pakistan. No definite rules can be laid down for determining whether a person is ordinarily resident in Pakistan but there is a presumption that a person is resident if he maintains a home in Pakistan or resides in the country for a substantial part of each year or pays income-tax as a resident of Pakistan. On the other hand, the fact that a person gives an address in Pakistan does not necessarily mean that he should be regarded as a resident if he is in fact only a temporary visitor and is ordinarily resident outside Pakistan.
(d) The following terms used in the Manual are described below:
(i) Rupee -'Rupee' means the Pakistan Rupee unless otherwise specified.
(ii) Act-'Act' means the Foreign Exchange Regulation Act, 1947.

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