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KSE plea to allow banks to repatriate foreign investors' sale amount

RECORDER REPORT

KARACHI: The Karachi Stock Exchange (KSE) has suggested that the State Bank of Pakistan should authorise custodian banks to repatriate sale proceeds of foreign investors to rehabilitate their confidence and attract more investment in the capital markets.

According to sources close to the stock market, about $30 to $40 million have been allowed repatriation from the country which had been stuck up for the last couple of months.

Arif Habib, Chairman, KSE has welcomed and appreciated the action of the SBP for clearing all pending applications for remittance of funds held in "Special Convertible Rupee Account" (SCRA) of the foreign portfolio investment as well as to quickly clear such applications in future.

Arif further emphasised that the SBP should restore the previous practice of freely repatriable status of SCRA for foreign portfolio investors, authorising the custodian banks to repatriate sale proceeds of foreign investor directly without taking prior permission of State Bank of Pakistan.

The chairman pointed out that at present the outstanding portfolio investment of foreign investors was not much and the freely repatriable status was not likely to affect the foreign exchange reserves position adversely. It would rather boost the confidence of the foreign investors and would help the country in attracting foreign investment through capital market.

Arshad Arif, head of research at ABN AMRO Securities, said that the move of central bank might create some selling pressure from the foreign portfolio investment in all the major blue chip stocks. However, the magnitude would not be enormous as majority of the foreign investors had already sold their stakes.

Arshad said that the bank had further indicated that it would entertain all the future applications for foreign exchange on prompt basis. With this, decision, the bank finally removed all the currency controls over the foreign portfolio investors that had been introduced by the SBP under the post nuclear scenario.