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CHAPTER XIII
IMPORTS

1. Scope of Chapter.
This chapter sets out the regulations relating to sale of foreign exchange by the Authorised Dealers against import of goods into Pakistan from any country.

2. Import Trade Control.
Import of goods into Pakistan is regulated by the Ministry of Commerce, Government of Pakistan, under the Import and Export (Control) Act, 1950 and the notifications issued thereunder. No import is permissible from Israel and South Africa or from any other country which may be notified by the Ministry of Commerce. Import of goods originating from any of these countries/sources is also prohibited. Imports from India are regulated as notified by the Ministry of Commerce, Government of Pakistan from time to time.

3. Registration of Importers.
(i) No person can import goods into Pakistan unless he is registered with the Chief Controller of Imports and Exports, under the Registration (Importers and Exporters) Order, 1952 or exempted from the provisions of the said Order.

(ii) Authorised Dealers should, therefore, verify that the importer is registered or otherwise exempted before any letter of credit is opened/contract registered or remittance made on his behalf for imports into Pakistan. Authorised Dealers should ensure that the registration number of the importer is invariably furnished on form 'I'. Where the importer has been granted an exemption, a suitable mention of this fact should be made on form "I". Even if a person or a firm presents a valid import licence but is not able to give the registration number, the Authorised Dealer should not open any letter of credit/ register the contract or deliver any shipping or other documents against payment for eventual remittance unless the importer furnishes the registration number or produces evidence to the effect that he has been specifically exempted from the requirement of registration.

4. Opening of/ extension in letters of credit-time frame/change of beneficiary.
(i) Authorized Dealers can open letters of credit for a period upto 12 months. However, in respect of machinery and mill-work which are required to be specifically manufactured and the period of manufacture is more than 12 months, this period is upto 24 months. The validity of the letters of credit within the 12/24 months period mentioned above can be extended by the Authorized Dealers at any time if requested by the importers., Authorized Dealers can also extend the validity of the letters of credit beyond the initial period of 12/24 months mentioned above for a further period of 24/36 months in the case of items other than machinery and mill-work and ‘machinery and mill-work’ respectively provided the requests for extension are received with in the initial period of 12/24 months adverted to above or extended validity period. Such extensions will be subject to payment by the importers of revalidation charge $0.25% for each six monthly period on the un-utilized value of letters of credit. The revalidation charges will be payable for the period commencing after the expiry of initial 12/24 months period mentioned above. The goods will be released by the Customs in cases where import has been made within the initial 12/24 months period without any certificate from the L/C-opening bank while release of goods imported during the extended period will be subject to production of bank certificate as per Appendix-V-23.

(ii) Authorized Dealers are also allowed to amend the letters of credit envisaging change of the beneficiary at the request of the importers provided the importers approach the Authorized Dealers for the change within the validity of the letter of credit.

5. Payments through Authorized Dealers in the Foreign Exchange Area of the Importer. ( Existing para has been deleted.)


6. Classification of Imports.
Before establishing any letter of credit/registering contracts, Authorized Dealers should take all precautions to ensure that the goods to be imported under it are clearly classifiable under the Import Trade Control Schedules. In all cases of doubt, reference should be made either by the Authorized Dealer or the importer direct to the Export Promotion Bureau. Failure to do so may result in confiscation of goods or imposition of penalty for violating the provisions of the I.T.C. regulations. In all such cases establishment of letter of credit/registration of contract and/or making of remittance will also constitute infringement of the Foreign Exchange regulations.

7. Endorsement of the Amount on Invoices.
Before delivering the import documents to the importers, Authorized Dealers should endorse on the invoices accompanying the bills, the amount of foreign exchange both in figures and words which they have remitted from Pakistan. The endorsements should be made under their stamp and signature. The same procedure should be followed by Authorized Dealers in respect of remittances made by them against bills received on D.A. terms.

8. Terms of Imports.
Subject to the provisions of this Chapter, imports can be made on FOB basis, C&F liner terms basis or C&F free out basis. However, prior permission of the State Bank shall be obtained for import of sugar and food grains (cereals) on C&F free out basis.

9. Remittances of Bank Charges in respect of imports.
The Authorized Dealers can make remittance of the following bank charges on account of imports. The particulars of the charges should be specifically mentioned on the relevant forms:-

(i) L.C. Advising Commission.
(ii) L.C. Amendment Commission.
(iii) L.C. Confirmation Commission.
(iv) Negotiation Commission.
(v) Un-utilized letter of credit Commission.
(vi) Payment Commission.
(vii) Reimbursement Commission.
(viii) Collection Commission.
(ix) Acceptance Commission (Usance Drafts).
(x) Postage and Cable Charges.

Remittances of bank charges other than the items mentioned above in respect of imports will be subject to the prior approval of the State Bank.

10. Remittances in Excess of the Amount of Letter of Credit.
In case where the value of documents exceeds the amount of the letter of credit and the foreign correspondent negotiates the documents because of the excess amount being small or sends them on collection, Authorized Dealers may allow remittance of the excess amount subject to the following conditions:-

(i) The amount does not exceed 5 per cent of the amount of letter of credit subject to a maximum of US$ 500.
(
ii) The bill of entry/certified invoice in respect of the consignment covers the increased amount.

11. Collection of Freight on Imports on F.O.B. basis in the Private Sector.
Following procedure will be followed for imports on FOB basis in private sector:-

(i) The Importers desiring to make imports on FOB basis will get the letters of credit opened/contracts for imports on consignment basis registered through/will their bankers provided the importers fulfil other instructions issued by the Government of Pakistan/State Bank of Pakistan with respect to imports.

(ii) The shipping lines/airlines will obviously issue Bills of Lading/Airway Bills in connection with FOB imports on ‘Foreign to Collect’ basis. As and when freight is required to be paid in Pakistan rupees, the importers will approach the Authorized Dealers who had opened letter of credit/registered the contract for import on consignment basis alongwith a copy of Bill of Lading/Airway Bill indicating the amount of freight payable together with the freight invoice issued by the carrier-where available-for issuance of a certificate in the format Appendix-V-24 which will bear the name/address of the issuing Authorized Dealer and a running serial number.

(iii) The importers will then pay the freight amount to the carriers in Pakistan rupees and will also surrender the ‘certificate’ referred to in the preceding sub-para to the concerned carrier.

(iv) The airlines/shipping companies and their agents will not accept freight on FOB imports without Authorized Dealers’ certificate mentioned in sub-para (ii) above. The airlines/shipping companies will invariably attach the said ‘certificate’ (Appendix-V-24) in original alongwith the applications to be made to Joint Director (Operation), Foreign Exchange Department, State Bank of Pakistan, Central Directorate, Karachi, for allowing remittance of surplus freight collections.

12. Collection of Freight on F.O.B. Imports by Public Sector in other Cases.
The cases of import by the public sector on FOB basis the carriers should not accept freight in Rupees without the approval of the State Bank. Approval will be given by the State Bank after charging the full amount of the freight to the foreign exchange allocation of the respective Government/Semi-Government agency. While applying for approval, the carrier company will produce with the application a letter in the prescribed form (Appendix-V-25) from the concerned Department/Agency authorizing the State Bank to debit its foreign exchange allocation with the freight amount. As an exception to the above, it will be in order for the carriers to accept freight in Rupees on account of FOB imports by Ministry of Defence only subject to post-facto approval. Application for permission to pay freight in Rupees in respect of imports by the Ministry of Defence will be made by the Controller of Military/Naval/Air Force Accounts in triplicate in the above proforma. Approval will be accorded by the State Bank on the original copy of the application with the following narration:-

While the triplicate copy of the application will be retained by the State Bank, the original and duplicate will be returned to the Controller of Military/Naval/Air Force Accounts. The latter will furnish the original copy to the carrier concerned.

13. Shipment of public sector cargo through PNSC vessels/PIA.
As an exception to the provisions of para 12 above, it will be in order for the PNSC and PIA to accept freight in Pak Rupees on FOB imports by the Public Sector agencies (Ministries Departments, autonomous and semi-autonomous public sector organizations) provided the goods are carried by them on freight to pay basis. PIA, will however, accept cargo only for the sectors covered by it. Authorized Dealers’ Certificate mentioned in para 11(ii) above, will not be required to be produced to PNSC/PIA by the importing agencies.

14. Payment of Freight on Import of Trade Samples.
Airlines/shipping companies can accept freight in Rupees upto Rs. 2000/- per year per registered importer for import of bonafide trade samples. While accepting freight the airlines/shipping companies should obtain a certificate from the registered importer to the effect that the total amount of freight already paid including the amount to be paid during the calendar year on account of trade samples received by him, does not exceed the limit of Rs. 500. The certificate should be submitted by the airlines/shipping companies to the State Bank alongwith their monthly statement in which the collection of such freight is reported.

15. Remittance of Proceeds of Dishonoured Bills.
In those cases where the original drawee dishonours the bill and the foreign shipper or his local agent finds another buyer, the Authorized Dealers may make remittance not exceeding the value of such bills without the prior permission of the State Bank on the basis of authorization to be issued by the Ministry of Commerce, Government of Pakistan.

16. Remittance involving Violation of I.T.C. Regulations. ( Revised Para )


17. Imports on Private Account.
Certain categories of imports are exempted from the Import Trade Control Regulations. For example, intransit imports, imports by diplomatic officials in Pakistan, imports in bond, imports to gift parcels upto the exempted limit and imports of specified items by private parties for their personal use upto prescribed limits. Authorized Dealers should not allow any remittance against such imports except where books, magazines, journals or medicines for private use are involved as laid down in paras 11, 14 and 20 of Chapter-XVI.

18. Import Letters of Credit.
Authorized Dealers should not establish, advise, notify or confirm any letter of credit or guarantee or similar undertaking covering imports into Pakistan the implementation of which would involve remittance from Pakistan except in accordance with the regulations laid down in the following paragraphs.

19. Terms on which Letters of Credit may be opened.
All letters of credit and similar undertakings covering imports must be documentary letters of credit and should provide for payment to be made against full set of clean on board (shipped) bill of lading, air consignment notes, railway receipts, post parcel receipts (or in the case of bulk import of books from U.K. against "Statement of Dispatches" in lieu of post parcel receipts) showing dispatch of goods to a place in Pakistan. All letters of credit must specify submission of signed invoices certifying the country of origin.

20. Import on Usance Basis.
(i) The Authorized Dealers may open letter of credit or register contracts for imports into Pakistan providing for payment on usance basis subject to the condition that such letters of credit/contracts should not stipulate payment of any amount by way of interest separately. The usance should commence from the date of issue of Bill of Lading/Air Way Bill etc. or the acceptance of Bill of Exchange by the drawees as the case may be. The letters of credit opened on usance basis cannot subsequently be converted on sight basis. Similarly the terms of the contracts covering payments on usance basis registered by the Authorized Dealers cannot subsequently be changed to sight basis.

(ii) Quote "Usance imports can also be made on the basis of letters of credit/contracts envisaging prices quoted on spot basis and payment of interest separately at a rate not exceeding the relevant LIBOR + 1.5%. The payment of interest will be subject to deduction of Pakistan taxes, if leviable. In the cases falling under this category, the suppliers will draw separate Bills of Exchange for the spot price of the goods shipped and for the interest amount. The Authorised Dealer will arrange remittance of the amounts of the Bills on maturity after deduction of Pakistan taxes leviable on the interest amount. to this end, the importers will furnish to the Authorised Dealer a certificate from the Income Tax Officer or Auditors showing the amount of tax payable on the interest amount and quadruplicate copy of the receipted challan showing the deposit of the tax amount in the Government account. The Authorised Dealers will also maintain a register for recording details of such transactions in the following format:-

Ref F.E. Cir. No. 54 Dated 31st December 1998.

Ref F.E Cir. No. 37 dated 13th July 1998

Premature Payment of Usance Bill.
(iii) It is also not permissible to effect payments of usance bills prematurely. Where, however, importers desire to make premature payment of any usance bill, the Authorized Dealers may effect remittance after deducting from bill amount interest at the rate of one point five (1.5) per cent per annum over LIBOR for the respective currency/respective tenure or the built-in interest in the invoice if available (whichever is more) for the number of days intervening between the date of remittance and the date of maturity of the bill. Particulars of such payments are also to be reported by the remitting branch to its Head Office.

Ref F.E. Cir. No. 14

21. Import of old Ships for Scrapping.
Letters of credit for import of old ships for scrapping may be opened by the Authorized Dealers in accordance with the normal procedure and after scrutiny of the following documents:-

(a) Memorandum of agreement or contract of sale; and
(b) Confidential reports on buyers and sellers.

Authorized Dealers will satisfy themselves that the ship is free from all encumbrances and that the seller has a legal title to the ship.

22. Letters of Credit for Shipment by Country Craft, Motor Launch or Truck.
Ordinarily it is not permissible to open letters of credit providing for shipment by means of country craft, motor launch or truck except by public sector agencies or by well established and reputable firms in the private sector provided in the latter case the Authorised Dealers are satisfied about their financial and business integrity and they have no doubt that the goods covered by such letters of credit will be received in Pakistan.

In the case of other importers in the private sector, letters of credit for import of goods by means of country craft, motor launch or truck may be opened by the Authorised Dealers subject to the following conditions:

(i) The supplier abroad furnishes guarantee of a bank in the country of export for an equivalent amount to the effect that should the goods be lost or damaged or pilfered, the above guarantee can be invoked and the amount remitted against the letters of credit recovered.

(ii) Alternatively, the letter of credit provides that payment will be made to the foreign suppliers after the goods have been received and cleared by the Customs in Pakistan.

In respect of importers in the private sector who are unable to fulfil the conditions at (i) and (ii) above the Authorised Dealers should refer their cases to the State Bank with full particulars.

23. Types of Letters of Credit not permitted.
All imports into Pakistan, except those specifically exempted in the Government Import Policy, are subject to compulsory letters of credit/registration of contract. It is, however, not permissible to open clean, revolving, transferable or packing credits. Applications for opening such letters of credit should be referred to the State Bank with full particulars.

24. Prohibition to open Letters of Credit for Import from Certain Countries.
It is also not permissible to open letters of credit for imports into Pakistan in favour of beneficiaries in Israel or of goods originating from that country.

25. Imports in PICIC/NDFC/BEL/NDLC under Foreign Currency Loans of Credit.
(i) PICIC/BEL/NDFC/NDLC can open letters of credit under the foreign currency lines of credit contracted them with the approval of the Government of Pakistan, and the foreign currency loans contracted by the Government of Pakistan and placed at their disposal for on-lending to their customers.

(ii) In all cases of imports against letters of credit issued by PICIC/BEL/ NDFC/NDLC, it should be ensured that import is made on C&F basis unless shipment is made on Pak flag vessels and in that case letters of credit may provide for imports on FOB basis on payment of freight in Pakistan rupees.

26. Letters of Credit to be opened only against Firm Coatracts.
Authorised Dealers should ensure before opening a letter of credit that in each case a firm commitment exists. For this purpose, they should see documentary evidence that a firm order for the goods to be imported has been placed and accepted. Authorised Dealers should ensure before processing letter of credit that an invoice, order or indent has been issued by an indentor duly registered with the licensing authority as importer or indentor. Authorised Dealers should also ensure that while opening letters of credit, full description of the goods to be imported is given in each credit alongwith their prices. In all cases where the amount of the letter of credit is Rs. 1,500,000/- or over, Authorised Dealers should obtain a confidential report on the exporter from their branches or correspondents abroad or in their discretion satisfy themselves as to the standing of the shipper by consulting standard books of reference issued by international credit agencies such as Seyds, Dunn and Bradstreet. Such reports should be obtained by the Authorised Dealers themselves and the reports if submitted by the importers themselves should not be accepted. Even in the case of imports of the value of less than Rs. 1,500,000/-  it is important that the Authorised Dealers satisfy themselves about the bonafides of the transactions before opening letters of credit.

27. Methods of Payment under Letters of Credit.
(a) Letters of credit may be established providing for payment to beneficiary either in the country of origin of goods or in the country of shipment of goods.

(b) Authorized Dealers may also establish letters of credit providing for payment to the beneficiary in a third country, not being the country of origin of goods or the country of shipment provided they are satisfied that the payment to the beneficiary in a third country does not involve extra expenditure. This facility is however, not admissible for the import of goods which are directly shipped from the ACU member Countries.

(c) Authorised Dealers may also establish letters of credit providing for shipment of goods of the origin of more than one country provided the beneficiary remains the same and the shipment does not involve extra expenditure.

(d) Letters of credit established as per (a),(b) and (c) above should provide for payment in any of the following manners:
(i) in any foreign currency.
(ii) in Rupees for credit to the non-resident bank account of the country of the beneficiary or of the country of origin/ shipment of goods.
(iii) Through ACU Clearing Arrangement where letters of credit envisage shipment directly from ACU member countries.

(e) Opening of letters of credit providing for payment in any other manner requires prior approval of the State Bank. Such requests giving full facts of the case alongwith their recommendations should be forwarded by the Authorised Dealers to the State Bank.

(f) It is also not permissible to establish letters of credit providing for alternate countries of origin of goods unless prior approval of the State Bank is obtained.

28. Imports on Consignment Basic.
Ref F.E. Cir. No. 37 dated 13th, July 1998

Ref. F.E. Cir. No. 01 dated 18th January 2000
The under noted procedure will be adopted for making imports without opening of letter of credit.

(i) The importers will submit a copy of the contract/purchase orders/proforma invoices/indents etc. to the Authorised Dealer for registration. The Authorised Dealers not holding the original category pass books of the importers can also register the contracts/purchase orders/proforma invoices/indents etc. pertaining to freely importable items after calling for authenticated Photostat copies of the category pass books from the Authorised Dealer holding the original document.

(ii) The Authorised Dealer registering the contract etc. will issue to the importers, a registration certificate in the format in Appendix V-27.

(iii) In case the documents covering imports are received by the branch of the Authorised Dealer which had registered the Contract/Purchase Order/ Indent/Proforma Invoice, directly from the bankers of the suppliers abroad, the remittance may be effected in terms of the instructions laid down in paragraph 42 of this Chapter provided the documents conform to the terms of the relative Contract/Purchase Order/Indent or Proforma Invoice.

(iv) In case the shipping documents are received by the importers directly, prior approval of the State Bank for remittance should be obtained in accordance with the instructions embodied in pare 42 of this chapter.

(v) In case of imports from ACU member countries, remittances will be effected through ACU Clearing Arrangements.

(vi) Forward cover will be available to the importers in accordance with the terms and conditions laid down in Chapter IV of this Manual but such cover will be booked only on the date of registration of the Contract/Purchase Order/Proforma Invoice/Indent etc.

(vii) Authorised Dealers will incorporate the figures of the contracts registered by them/remittances made there against in the statements as per appendices V-133, V-134, V-135 and V-136 (Pare 15-Chapter XXII).

29. Imports under Letters of Credit.
Ref F.E. Cir. No. 54 Dated 31st December 1998.
The import of items not subject to authorization from the Export Promotion Bureau/Ministry of Commerce will be made by opening of letters of credit subject to the following terms and conditions:-

(i) Before opening letter of credit, Authorized Dealers must ensure that the importer holds a valid registration as importer with the export Promotion Bureau. Authorised Dealer should also ensure to make endorsement of L/C opened for items (Other than freely importable items) whose import is subject to certain conditions in the original category Pass Book. In case an importer opens letters of credit with more than one bank, the Authorized Dealer holding the original category Pass Book will make out Photostat copies thereof, authenticate the same and furnish other concerned Authorized Dealers with it and will keep record thereof.

(ii) The items of import covered by a letter of credit can be changed before shipment of goods provided new items are importable and the application for change is submitted to the bank within the validity of letter of credit. In case original beneficiary fails to honour its commitment, Authorized Dealers can transfer letter of credit to another beneficiary provided the items of import are not changed and transfer is made within the validity of the original letter of credit. The validity of the letter of credit is to be determined as per para 4 of this Chapter.

(iii) Where authorization from Ministry of Commerce is required for import, letter of credit will be opened only on production of the requisite authorization.

(iv) No letters of credit are to be opened for goods which have already been imported. In such cases, clearance of the Ministry of Commerce, Government of Pakistan will have to be obtained.

(v) All importers while applying for establishment of letter of credit for an amount exceeding Rs. 45,000/- during a financial year would produce a valid certificate of Membership of at least one of the trade organizations licenced and recognized by the Federal Government.

(vi) Payments can be made within 18 months from the date of opening of Letter of Credit or on the expiry of usance period, if any, whichever is later.

(vii) Letters of credit may provide for negotiation of documents within a period not exceeding 30 days from the date of shipment.

(viii) Authorized Dealers may also make amendments in the letters of credit without reference to the State Bank provided the amendments are not in conflict with the provisions of this Manual or the Import Trade Control Regulations.

30. General Authority for Remittances against Imports. ( Revised Para )


31. Remittances against Documents received directly by Importers.
Where the shipping documents are received by the importers directly, or by the Authorized Dealer from the overseas suppliers instead of the bankers of the suppliers, applications for remittance against such imports must be forwarded to the State Bank for prior approval. Such applications should be made only after the goods have been cleared from the Customs. The applications should be accompanied by the Exchange Control copy of Bill of entry or Customs certified invoices in the case of imports by post, relative invoices, Non-negotiable copies of the Bill of Lading/Airway Bill/Railway Receipt/Truck Receipt etc. and ‘I’ form duly completed and signed. Remittances may be effected only after the State Bank has given its approval on form ‘I.

32. Advance Remittances.
(a) State Bank may consider application for advance remittance against imports where the goods are of a specialized or capital nature. Applications for such advance remittance should be made to the State Bank on form ‘I’ and should be accompanied by the original contract (with a spare copy) entered into between the importer and the foreign manufacturer or supplier. The applications should also be supported by an undertaking in the prescribed form (Appendix V-28) duly countersigned by the Authorized Dealer. In special cases advance remittance may be allowed upto 33-1/3 of the estimated C&F value of the total quantity of the goods to be imported.

(b) In the case of import of books and subscription to journals and magazines etc. by Government and Semi-Government agencies, Authorized Dealers may allow direct advance remittance upto the amount of the relative letter of credit/contract. In the case of subscription to magazines/journals etc., there will be no Customs bill of entry/certified invoice. In such cases, Authorized Dealers will attach the relative debit note with the duplicate of form ‘I’ giving on both a suitable remark indicating that the remittance has been allowed in advance. As regards import of books, there will be usual Customs bill of entry/certified invoice which will be processed in the normal course.

(c) Authorized Dealers may allow advance remittances for import of books, journals and magazines etc. by commercial importers upto the amount of relative proforma invoices. Since magazines and journals are imported in bulk by the commercial importers in their own names, there will be usual bills of entry/certified invoices as in the case of import of books.

(d) At the request of Industrial establishments registered as importers, Authorised Dealers may issue foreign currency demand draft upto the value prescribed in the Import Policy (currently US$ 15,000 per fiscal year for 1999-2000) for import of spare parts/machinery, without opening of letter of credit, provided such import is made by air or by courier. Authorised Dealers will maintain a record of all such drafts issued by them. They will obtain from the applicant a declaration showing the amount already remitted by him during the current financial year and issue demand draft only upto the extent of the balance entitlement. They will also obtain exchange control copy of Bill of Entry and evidence to the effect that the import was made by air/courier. These records will be retained till the next inspection of the concerned bank branch by the State Bank’s Inspectors.

(e)

33. Processing of Form ‘I’.
Applications for remittance against imports into Pakistan should be made on Form ‘I’ (Appendix V-29) which should be signed by the importer or his authorized agent. The signatory should disclose his status/capacity in the concerned firm/company etc. i.e. Director/Partner/Proprietor/Manager etc. In case the form is signed by the agent of the importer, it should be ensured by the Authorized Dealers that he holds a valid legal power of attorney from the importer and the terms of the power of attorney are such that the importer as well as attorney can be held responsible jointly and severally under the Foreign Exchange Regulation Act, 1947. The form should be submitted to an Authorized Dealer who must sign the certificate as provided therein under his stamp and signature. In cases where the Authorized Dealers are empowered to approve remittances on behalf of the State Bank, they will do so by recording their approval on the form. In all other cases, the forms together with the required supporting documents should be forwarded to the State Bank for approval.

34. Functional Utility of the various copies of Form ‘I’.
Form ‘I’ consists of four copies. The original copy of the form duly signed by the importer is required to be sent to the State Bank by the Authorized Dealers with their monthly return of sales. In cases where the importers do not retire the documents and the authorized Dealers fail to get the original copies of the form signed by them, they should themselves sign the quadruplicate copy of the form and send it with the monthly return to the State Bank. All cases where the importers fail or refuse to sign the Form ‘I’ should be specifically reported to the State Bank.

35. Indication of Form ‘I’ for Government imports.
In the case of remittances against imports by Government Departments or in cover of imports by private parties which are marked "ON GOVERNMENT ACCOUNT", Authorized Dealers should mark forms ‘I’ with a bold letter ‘G’ to indicate that the remittance is on Government account.

36. Use of foreign exchange acquired for imports.
In all cases of remittances against imports into Pakistan, the importers shall not use the foreign exchange so acquired other than for that purpose.

37. Loss of Goods.
In the event of total or partial loss of goods, it will be responsibility of the importers to recover claim from insurance company/shipping company/supplier, as the case may be.

38. Designation of Authorised Dealers.
(a) The State Bank designates Authorised Dealers for handling imports under credits and barter agreements. Letters of credit for import under these arrangements are required to be established through the designated Authorised Dealers only. Importers are, however, free to approach the designated banks either directly or through their bankers.

(b) In the case of US AID Loans, PL-480 and KFW (German) Loans, the State Bank designates banks in U.S.A. and West Germany also for claiming payment or reimbursement from the loan/aid giving agencies. Similar designation of banks in the country of other aid giving agencies may also be made, if necessary, under the aid/loan arrangements.

39. Rates of Commission to be charged by Banks.
(a) Authorised Dealers may recover from the importers following charges:

(i) Bank charges specified in and remittable under the provisions of pare 17 of this chapter and the amount of interest, where authorised under loans like US AID Loans and others, payable to the foreign banks handling the transactions at the other end. The amounts of bank charges and interest as mentioned above may be remitted to the foreign banks without the prior approval of the State Bank subject to report on Form 'M'.

(ii) Their own commission at rates allowed by the Banking Regulation Department from time to time.

In respect of imports under Aid/Loans/Credits/Barters where the business is handled through Authorised Dealers who are not designated banks the commission will be shared equally between the designated bank and the bank handling the business on behalf of its customers.

(b) Authorised Dealers may recover commission at the following rates on letters of credit covering imports by the Government routed through State Bank:-

(I) In respect of cash/reimbursable loans/barters expressed in U.S. Dollar or any other foreign currency including L/Cs under A.C.U. arrangement:

(i) 1/8% if the value of the letter of credit is less than Rs.250,000/-

(ii) 1/16% if the value of the letter of credit is Rs.250,000/- or more.

(II) In respect of non-reimbursable credits and Rupee Barters: 3/8% irrespective of the value of the letter of credit.

The above charges are inclusive of foreign correspondent’s charges. However, in addition to the above, Authorized Dealers may recover actual cable/telex charges where L/Cs are desired to be established through cable/telex and confirmation charges of foreign bank if foreign bank’s confirmation is also to be added on opener’s request.

40. Special Features of various Aid, Loans and Credits.
(a) U.S. AID LOANS: After the signing of the loan agreement, U.S. AID, Washington issues letters of commitment which indicate the salient features of the loan as also the names of designated Pakistani and American banks. U.S. AID loans stipulate minimum monetary limits for the opening of each letter of credit as well as the value of each shipment. They may, however, issue one letter of commitment under each U.S. AID Loan financing letters of credit for amounts below the minimum unit requirements. Goods are required to be shipped on U.S./Pakistan flag vessels in accordance with the shipping requirements laid down in respect of each loan. U.S. Liner Services are available on some ports from where shipments can be made only on U.S. flag vessels. In cases U.S. flag vessels are not available on these ports, shipments can be made on Pakistan flag vessels or on the vessels of any other country which is included in the AID Geographic Code 941 after obtaining waiver from the U.S. AID. From ports where U.S. Liner Services are not available, shipments can be made on Pakistan flag vessels or vessels of other countries included in AID Geographic Code No.941. Procurement of goods should be from countries listed in AID Geographic Code 941. Under these loans sub-authorisations are issued on C & F basis. 2% or 10% of the freight amount under U.S. AID Loans on 'Free-Out' and 'Non-Free-Out' basis respectively which is not financed by AID authorities is paid from Pakistan's own resources.

(b) PL-480 PROGRAMME: Major food items like wheat, soyabean oil, tobacco and non-fat dry milk are imported under Public Law 480. Banks are not designated for import of wheat which is directly handled by the Ministry of Food. For the remaining items, banks in Pakistan and the U.S.A. are designated for handling imports. Payment to the suppliers is made directly by the Commodity Credit Corporation (C.C.C.) of U.S.A. for which Procurement Authorisation (P.A) is issued. Sub-authorisations are issued by the licensing authority on F.O.B. basis and shipments are required to be made on Pakistan and U.S. flag vessels on 50:50 basis. In the event of non-availability of U.S./Pakistan flag vessels, shipments can be made on vessels of any other country at the discretion of Commodity Credit Corporation. In case of shipments by Pakistan flag vessels, Pakistani Shipping Companies can accept payment of freight in Rupees without approval of the State Bank. In case of shipment on U.S. flag vessels, permission of the State Bank for opening of freight letter of credit is required in each individual case.

(c) I.D.A. CREDITS: Imports under I.D.A. Credits can be made from member countries of I.B.R.D. (International Bank for Reconstruction and Development) and Switzerland. Shipment is also required to be made on the vessels of member countries of I.B.R.D. and Switzerland. There are different case procedures for payments under I.D.A. Credits.

(d) OTHER LOANS AND CREDITS: In respect of loans and credits other than those mentioned above, which are provided by various countries, specific instructions are issued by the State Bank from time to time for handling imports and claiming reimbursements thereunder.

(e) ACU CLEARING ARRANGEMENT—ACU Clearing Arrangement provides a clearing system through which all eligible payments for current international transactions among the member countries other than payment relating to travel are compulsorily settled through the ACU mechanism which allows payment in the AMU or the currency of the participating country in which one party to the transaction resides. However, there is no bar to any contract or letter of credit or invoice being denominated in Non-ACU Currency provided such contract/letter of credit invariably contains a clause to the effect that payment of equivalent amount in ACU Currency/AMU shall be made through the Clearing Arrangement and also specify the manner in which the currency of the contract/letter of credit will be converted into the currency of actual payment/AMU. Payments for exports to member countries against letters of credit established under loans/credits taken by the importing country from the international financial institutions like World Bank, Asian Development Bank etc., can be realized in convertible currency outside the Clearing Arrangement.

41. Project Loans and Credits.
In respect of imports under Project loans banks are also designated. Normally, Authorised Dealers are advised to deliver shipping documents to the importing agencies free of payment.

42. Reimbursable Loans, Credits.
In case of reimbursable loans and credits, imports are financed in the first instance from Pakistan's own foreign exchange resources and reimbursement is obtained from the loan giving agency. In some cases imports are also financed from Pakistan's cash foreign exchange resources pending signing of the relevant loan agreement. As and when the loan agreement is signed, reimbursement is to be sought expeditiously from the relevant Loan/Credit giving agency. The procedures for obtaining reimbursement from the loan giving agencies are worked out on loan to loan basis.

43. Deposit of Counter Part Rupee Funds with the State Bank in respect of Foreign Non-Project Commodity Loans.
The designated Authorised Dealers will observe the following procedure for deposit of counter-part Rupee funds:

(i) Appropriate Rupee amounts in respect of imports under all foreign non-project commodity loans and credits on non-reimbursable basis will be deposited with the regional office/branch of the State Bank within three working days of the receipt of documents by the designated banks in Pakistan or within 10 days from the date of negotiation by the bank abroad, whichever happens to be earlier, at the rate of exchange prevailing on the date of judgment of documents in cases where no forward exchange is booked. Where forward cover has been booked, the booked rate is applied for the purpose of depositing Rupee funds.

(ii) The designated Authorised Dealers will submit to the concerned area Chief Manager of the State Bank a statement of Rupee deposits at the time such deposits are made against foreign non-project commodity loans and credits in the prescribed form (Appendix V-37). Copies of these statements will also be sent to various Government agencies.

44. Fine on delay in deposit of Counterpart Funds.
In the event of delay in depositing counterpart funds with the State Bank within the prescribed period, the concerned Authorised Dealer will pay to the State Bank fine at the rate of Rs.4 per day per Rs.l0,000/- or part thereof for the period of delay.

45. Documents received on Collection Basis due to Discrepancy.
(a)
(i) In cases where the overseas negotiating bank does not make payment to the supplier but sends the documents to the bank in Pakistan on collection basis due to discrepancy in the documents, the Authorised Dealers will deposit counterpart funds with the State Bank on retirement of the documents by the importers concerned. The prescribed period for deposit of counterpart funds will be reckoned as from the date of retirement of bill by the importer. If the funds are held back by the Authorised Dealers beyond the prescribed period, fine would be charged as per pare 58 above.

(ii) In those cases where the negotiating banks make payment to the suppliers under reserve or guarantee due to minor discrepancies in documents, either the documents should be sent back to the negotiating bank or the counterpart funds deposited with the State Bank within a maximum period of one week from the date of the receipt of the documents. In case, however, the designated bank in Pakistan chooses to retain the documents beyond the prescribed period of one week, a statement of all such cases should be sent to the Director of Accounts, Economic Affairs Division, Government of Pakistan, Islamabad/Karachi and the concerned Chief Manager of the State Bank showing the particulars of shipping documents and indicating names and addresses of the importers, letters of credit numbers and dates, sub-authorisation number (if any) and date, vessel, commodity and foreign currency amount specifying the detailed reasons for not depositing the amount within the prescribed period of one week. The cases in which deposits are made within a week need not be reported.

(b) Documents received on Usance.
The designated Authorised Dealer is required to deposit counterpart funds with the State Bank within the period specified in pare 57 above. The letters of credit opened by the Authorised Dealers for imports under Aid/Loans and Credits should not, therefore, provide for documents to be drawn on usance basis. Documents with usance clause if received by an Authorised Dealer will not be accepted by the State Bank as sufficient reason for waiver of fine on account of delayed deposit of counterpart funds.

(c) Deposit of Funds under Reimbursable Loans/Credits.
In case of loans and credits on reimbursable basis, the designated banks are required to deposit funds in the State Bank's Account with the Federal Reserve Bank, New York or with such other banks as may be specified from time to time. The deposits should be made immediately on reimbursement by the foreign loan/ credit giving agencies but not later than the date following that on which reimbursement is received. Late deposits will be subject to payment of fine at rates given in pare 58 above. The Authorised Dealers designated to open letters of credit for imports under loans and credits should, therefore, make necessary arrangements in advance with their correspondents abroad to effect the transfers within the stipulated period. Late receipt or non-receipt of reimbursement advice by the designated banks in Pakistan would not be accepted as sufficient reason for waiver of fine.

46. Exchange Facilities for Merchanting Business by Pakistani Intermediaries.
Ref . F.E No. 52 19th December 1998.

Ref F.E. Cir No. 8 dated 01 April 1998

Ref F.E. Cir. No. 35/FEP. 16 (326)Q-Poly-98 Dated 24th August, 1998

Ref F.E Cir. No. 47 Dated October 16, 1998

Ref. F.E. Cir. No. 46 FEP.16(326)Q poly-98 Dated October, 1998

(a) The State Bank is prepared to consider applications from residents of Pakistan to finance import of goods for residents in foreign countries provided that arrangements are made to receive appropriate reimburement from the country of ultimate import in each case either by back to back letter of credit or other suitable method. Such cases will be considered by the State Bank to whom applications should be made giving details of the arrangements under which the business is proposed to be conducted.

(b) As an exception to the above rule, residents of Pakistan have been allowed to engage themselves in three way merchanting trade through back-to-back letters of credit providing for payment in convertible currency or advance payments excluding payments under bilateral/multilateral accounts, in respect of the following commodities:

1 Crude Oil
2 Edible Oil
3 Wheat
4 Rubber
5 Cotton
6 Tea
7 Sugar
8 Fertilizer

Authorised dealers are permitted to open Letters of Credit in favour of third country exporters either against an irrevocable Letter of Credit on sight basis or against advance remittance in convertible currency received from the ultimate importer subject to the following conditions:

(i) The price differential includes intermediary's commission at not interested or Satisfay less than one percent, plus actual charges incurred on account of opening of back-to-back Letter of Credit, buying and selling rate differential etc.

(ii) The Letters of Credit to be established by Pakistani intermediary in favour of third country supplier will carry sufficient usance so that payment becomes due only after receipt of payment from the importer. In case where Letters of Credit are to be opened against Advance remittance the condition of usance will not be obligatory.

(iii) The amount of foreign exchange representing the price differential including commission will be converted in Pak rupees.

(iv) No commission or any other claim of whatsoever nature will be allowed to be remitted from Pakistan.

(v) No credit line such as export finance etc. will be available.

(vi) Goods will be shipped directly from the country of supply to the country of import.

(vii) No forward cover facility will be available for trade under this arrangement. However, if desired, the intermediary Pakistani trader can open a "Special Foreign Currency Account" with an Authorised Dealer in Pakistan for deposit of the proceeds of the Letters of Credit/Advance remittances received from the third country buyer pending (i) eventual payments to the third country suppliers under the back-to-back Letter of Credit stipulating reimbursement to the third country suppliers out of Special Foreign Currency Account and (ii) conversion in Pakistan rupees of the amount left out after making payment to the third country supplier against back-to-back Letters of Credit.

General permission has been accorded to the Authorised Dealers for opening and maintaining Special Foreign Currency Accounts for merchanting trade which will be subject to the following terms, conditions and the procedure:

(a) The account will be fed exclusively through remittances emanating either from the realization of proceeds under an irrevocable Letter of Credit opened by an overseas buyer for third country goods or advance remittance made by such buyer for supply of third country goods.

(b) The account will be kept outside the scope of Foreign Currency Accounts Scheme as embodied in Chapter-VI of this Manual. In other words the foreign currency received in such accounts will not be required to be surrendered to the State Bank Authorised Dealers can hold such foreign currency abroad in addition to the normal balances permitted to be held abroad. However, such balances will be reflected in Columns 10 and 11 of Appendix V-5.

(c) Interest accruing on the balances held in the account will be converted into and paid in Pak rupees.

(d) The exemption of interest income from levy of taxes etc. shall not be admissible.

(e) The accounts opened under this arrangement will be only "proforma accounts" and balances held in such Accounts will neither be entitled to credit ceiling nor will they be reflected in Pakistan books of Authorised Dealers.

After payment for import under the back-to-back Letter of Credit, the Authorised Dealer will prepare a statement in the format App. V-37.A matching the receipt and payment for each merchanting transaction individually and will submit the same to the concerned area Exchange Control Office of the State Bank. The reporting of inward and outward remittances would be as indicated in the format App. V-37.B. It may be added that withholding tax regime will not apply on such receipts.

47. Foreign Currency Loans and Credits.
(i) Foreign currency loans and credits negotiated by the Government of Pakistan with the international institutions and other agencies are utilised for import of machinery, capital goods, technical Know-how, commodities etc. Such credits negotiated for import of machinery, capital goods etc., are normally placed at the disposal of Development Finance Institutions e.g. P.I.C.I.C. and I.D.B.P., N.D.F.C., Bankers Equity Ltd., etc. who in turn disburse them to their constituents. The credits for import of commodities, raw materials, spares etc., are normally disbursed through licencing by the Chief Controller of Imports Exports against allocations made by the Economic Affairs Division, Government of Pakistan. Any other foreign currency credits negotiated privately would require approval of the Federal Government/State Bank.

(ii) As an expectation to the above, private sector entrepreneurs may obtain foreign currency loans from banks, financial institution, parent companies of the multinationals and as suppliers credit including credits under. PAYE Scheme, not involving guarantee, for financing foreign currency cost of projects covered by Government industrial/investment policy and the instruction issued by SBP from time to time the loans should be contracted on the best possible terms. The repayment period of such loans/Credits however, should not be less than five years.
Ref F.E. Cir No. 69 of 94, F.E. Cir 24 of 95 and F.E. Cir. 49 of 96.

48. Pay-As-You-Earn Scheme.
Since February, 1973 the Government has also instituted a scheme of Suppliers Credit called PAY-AS-YOU-EARN Scheme under which entrepreneurs in the private sector can negotiate foreign currency loans for import of plant and equipment for export oriented industries either for establishment of new industrial units or for balancing, modernization, replacement and expansion of the existing export oriented units. The industries covered by the Scheme are:

(i) Export oriented industries which include:
(a) Industries such as fish processing and modern rice milling, the bulk of whose production is exported, and
(b) Industrial units set up for export market within industrial sub-sectors which serve both the local market and the export market, such as textiles, carpets, leather, fruits and vegetables. Units, to qualify under this category, must give a guarantee to export 50% or more of their total output. In special cases such as engineering goods, the limit may be reduced to 25% in the first three years and 33% thereafter.

(ii) Sub-contracting arrangements for exports under which manufacturing units are established in response to specific orders, which are received from the foreign non-residents firms by local manufacturers as a sub-contractor, and

(iii) Service industry like hotels etc.

49.Features of the Scheme.
The main features of the PAYE Scheme, 1973 are as under:-
(a) Advance payment upto 15% of the C & F value of the machinery may be allowed provided the sponsors give an undertaking that in case machinery is not imported by the stipulated date, they will repatriate the foreign exchange to Pakistan or pay to the Government penalty amounting to 27% of the advance payment or any portion thereof which remains unrepatriated plus interest on it at the rate of 9% from the date of the remittance.

(b) Projects established under the above PAYE Scheme will be allowed a maximum of 50% of the F.O.B. value of their foreign exchange earnings in respect of goods manufactured and exported by the concerned units established or expanded under the Scheme for meeting their debt liability and other foreign exchange payments on account of royalty, technical fee and incidental charges.

(c) If in any financial year, the debt servicing liability cannot be met out of the prescribed percentage of earnings in that year, the sponsors will have to pay to the Government penalty to the extent of 27% of the Rupee equivalent of the short-fall.

(d) If a project has been established against a loan in convertible currency, it will be required to meet its obligations in convertible currency. Where a project has been set up on the basis of a loan repayable in commodities, export of commodities to the lending country will count towards repayment of the loan. Export against convertible currency made by the units concerned from the new capacity created under the Scheme to countries other than the lending country, will also count towards repayment of the loan.

50. Procedure for import of machinery and registration of repayment schedule.
(i) Foreign currency private loan agreements and suppliers credit agreements including credit agreements under PAYE Scheme as permitted under pare 62.(ii) above will be submitted to the State Bank for registration through the Authorised Dealer designated for the purpose within 30 days of the date of Agreement.

(ii) The Authorised Dealer will furnish the original loan/credit agreement alongwith (5) copies, a list of the company's Directors, project report showing the details of the project including its cost (broken into local cost and foreign exchange cost), location of the project and copy of Certificate of the Incorporation of the company to the Investment Division, Foreign Exchange Department, State Bank of Pakistan, Central Directorate, Karachi. In the case of Buyer's Credit, 3 copies of the purchase contract will also be furnished.

(iii) Approval of the Government of Pakistan will also be furnished where the loan/credit is provided at confessional rates by the banks/financial institutions under the instructions or policy of the foreign Governments

(iv) A copy of the loan/credit Agreement registered by the State Bank will be returned to the Authorised Dealer.

(v) The loan amount from foreign banks/financial institutions can be deposited in a foreign currency account to be opened with the prior permission of the State Bank. Such permission will be subject to such conditions as may be prescribed by the State Bank of Pakistan.

(vi) After the registration of agreement with the State Bank and issue of import licence, remittance of down payment may be made by the Authorised Dealers to the extent provided in the agreement. Such remittances shall be reported to the concerned Area Office, Foreign Exchange Department, State Bank of Pakistan, on form 'I' which, for statistical purpose is to be coded by them with appropriate commodity code on schedule E-2 with Department code as 750.

(vii) Alternatively, the sponsors may arrange a loan for financing down-payment to the suppliers of plant and machinery. Such an arrangement will, however, be subject to registration in accordance with the above procedure.

(viii) In order to establish the value of plant and machinery imported under the loan/Supplier's Credit, including credits obtained under PAYE Scheme, the sponsors will, immediately on receipt of the consignment, submit to the Area Office of Foreign Exchange Department, State Bank of Pakistan through the designated Authorised Dealer, the relative import documents viz. Exchange Control Copy of Bill of Entry, original invoice, copy of Letter of Credit.

(ix) After the liability to the foreign lender/supplier of plant and machinery as mentioned in sub-paragraph (viii) above has been established, the repayment schedule as per specimen given at Appendix V-38 should be submitted to the Investment Division, Foreign Exchange Department, State Bank of Pakistan, Central Directorate, Karachi in sextuplicate through the Authorised Dealer which has issued the repayment guarantee, for registration.

51. Re-payment under Pay-As-You-Earn (PAYE) Scheme.
Ref F.E Cir. No. 34 dated 8th July 1998.

Ref. F.E. Cir. No. 01 dated 18th January 2000
(i) After the repayment schedule has been registered by the State Bank, the remittances on account of principal and interest will be allowed by the Authorised Dealer subject to compliance with the requirements set out herein and after deduction of tax if payable. In case of exemption from income tax, a copy of the exemption certificate should be attached with the relative 'M' form. The application for remittance towards repayment of cost of plant and machinery and interest accrued thereon (instalment) will be submitted on the prescribed form (Appendix V-39) to the Authorised Dealer who had issued the related repayment guarantee. The application should be signed by the applicant and certified by the bankers and must be accompanied by Export Realisation Certificate in the prescribed form (Appendix V-40). The application will be accompanied by two forms 'M' (i.e. one for the amount of principal and the other for the amount of interest). Remittances on account of repayment of principal and payment of interest should be coded by the Authorised Dealers as 1830 and 1220 respectively, on schedule E-4 with Departmental Code as 775 in each case. Where the amount of 50% of the FOB value of export earnings of an industrial unit or enterprise in any financial year, upto the date on which the instalment has fallen due, is not sufficient to cover the debt liability and other liabilities as laid down in Clause 7 of the Scheme, the remittance may be allowed by the Authorised Dealer concerned on submission of an undertaking by the applicant to the effect that he will submit evidence of having repatriated sufficient export earnings during the financial year concerned, to cover the remittance and that in case there is any shortfall, a penalty amounting to 27% of Rupee equivalent of the excess remittance plus interest thereon @ 9% per annum from the date of remittance, shall be paid to the State Bank on account of the Federal Government by the 8th July of the next financial year. This undertaking should be countersigned by the Authorised Dealer concerned, who should assume responsibility for the payment of the penalty and interest and forward the undertaking to the State Bank alongwith the form 'M' covering the remittance.

(ii) In respect of remittances made under the PAYE Scheme, the Authorised Dealers will send to the State Bank every month statements in triplicate in the prescribed forms (Appendices V-36 & V-37).

(iii) In case any discrepancy is found in the information contained in an application (V-39) or export realisation certificate (V-40) on the basis of which an Authorised Dealer has allowed remittance of principal and interest, the applicant will be required to arrange for repatriation to Pakistan of the amount, if any, remitted in excess or alternatively on demand by the State Bank, pay to it on account of the Federal Government penalty amounting to 27% of Rupee equivalent of the excess remittance plus interest thereon @ 9% per annum from the date of remittance. The Authorised Dealer who has allowed the remittance shall be responsible for compliance with the above requirements including payment of penalty and interest.

52. Payment of Penalty Head of Account.
The penalty of 27% recoverable from the applicants under the above Scheme should be deposited with the State Bank by the concerned project or its bankers on challans filled in quadruplicate for credit to Federal Government's account with the State Bank under the head "1000 Non-Tax Receipts- 1300 Miscellaneous Receipts-1390 others-Fees, Fines and Forfeitures".

53. Re-payments under other Supplier's Credit/Buyer's Credit/Loans.
Ref F.E Cir. No. 34 dated 8th July 1998.
(i) After the repayment schedule has been registered by the State Bank, the remittance on account of principal, interest and other charges will be allowed by the Authorised Dealers strictly in accordance with the approved schedule. Remittance of interest will be effected after deduction of tax, if payable. In case of exemption from income tax, a copy of the exemption certificate should be attached with the relative 'M' form. Remittances on account of repayment of principal and interest shall be reported separately on forms 'M' and coded as 1952 and 1212 respectively with Department code 121. Such 'M' forms should be prominently marked at the top as under:-

"Remittance of Principal/Interest under Loan/Supplier's Credit vide Repayment Schedule Registered with the State Bank under Registration No..........."

(ii) In some cases of Loans/Supplier's Credits, interest is payable at a varying rate linked with LIBO Rate. In such cases, it would not be possible for the borrowers to show in advance the exact amount of interest payable with future instalment. It would be in order for the Authorised Dealers in such cases to remit the actual amount of interest calculated on the basis of the formula appearing in the approved contract. They should, however, show the number of days, the applicable rate and the principal amount on which interest has been paid in the 'M' form.

54. Imports by public sector agencies to which special allocation is made by the Government.
Public Sector agencies like WAPDA, Karachi Electric Supply Corporation Limited, Pakistan State Oil Co, Ltd., OGDC, etc. which are allocated foreign exchange for their import requirement or the private parties who are allowed to import on Defence/Railway’s account shall make applications to the area foreign exchange offices of State Bank of Pakistan for permission to get the contracts registered with the Authorized Dealer/Open letters of credit, on Appendix V-38. The Authorized Dealer will register contract/open letter of credit in these cases on the basis of clearance issued by State Bank on Appendix, V-38.

55. Imports without letter of credit/registration of the indent/proforma invoice/order.
Ref F.E Cir. No. 34 dated 8th July 1998.
In terms of para-28 and 29 of this Chapter, the importers registered with the Export Promotion Bureau under the provisions of Registration (Importers & Exporters) Order, 1993, can make imports either by opening letters of credit or by registering the indents/proforma invoices or orders with the Authorized Dealers. As an exception to the above general rule, registered importers have been permitted to make imports upto US$10,000 (or equivalent in other currencies) without opening of letters of credit or registering the indents/proforma invoices or orders with the Authorized Dealers, and make remittances there against. The registered importers are free to make remittances in respect of such imports either in advance or after receipt of the goods in Pakistan. The remittances can be made through demand draft/ telegraphic transfer/mail transfer. In cases where the registered importers make advance payment for such imports, they will be required to furnish to the Authorized Dealer at the time of making a request for remittance, an undertaking to produce invoices and bills of landing/airway bill within a period of four months from the date of advance payment. The Authorized Dealers will pursue the matter with the importers and report those cases to the area foreign exchange office where the requisite documents are not produced within the prescribed time limit. In cases where remittances are made after receipt of goods in Pakistan, the registered importers can approach the Authorized Dealers for remittance on the basis of invoices and original bills of lading or airway bill. The Authorized Dealers have our general permission to make advance payments or arrange remittances against the prescribed documents on receipt of goods in Pakistan.

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