RIZWAN BHATTI
KARACHI: The State Bank of Pakistan (SBP) has issued updated Exchange Companies Manual containing regulations made up to December 31, 2017.
According to SBP, Exchange Companies and Exchange Companies of “B” category are required to bring related regulations to the notice of their customers and to ensure 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/or any rules, orders or directions issued thereunder, immediately as it comes to their notice.
Exchange Companies Manual has been updated by incorporating the related instructions issued by the State Bank through FE Circulars and Circular Letters.
As per manual the exchange companies’ license will be issued initially for a period of three years and licenses will be renewed for five years from the date of expiry of the license. However, license will be renewed after giving due consideration, inter alia, to State Bank inspection report, compliance status, corporate governance and financial health of the Exchange Company.
State Bank will have the right to revoke a license of an Exchange Company at any time. Before a license is revoked, the Exchange Company will be served with a notice mentioning therein the reasons for such revocation and instructions for the company to explain its position in writing within 30 days from the date of issuance of notice.
As per manual the trade name of the Exchange Company will not include the word “Bank”, “Financial Institution”, “Investment/Commercial/Finance/Real Estate” or any other description that indicates activities other than exchange business.
Minimum authorized and paid-up capital of an Exchange Company will be Rs. 200 million and Exchange Companies are allowed to have foreign participation in their equity up to a maximum of 50 percent. In addition, State Bank would permit repatriation of profits in proportion upto the extent of foreign equity.
The SBP has asked the exchange company to follow the prudent practices and would develop/follow the standard policies related to Internal Controls, Audit, Human Resources, Information Technology, Anti Money Laundering (AML) and Know Your Customer (KYC), etc.
State Bank has said that it will continue to update/compile the Manual from time to time for convenience of users. “Due care has been exercised while incorporating the related instructions. However, in view of the voluminous work involved in the process, errors and omissions may be expected. In case of any ambiguity, users are advised to refer to the original FE Circulars/Circular Letters on the relevant subjects(s)”, it added.
Further, Exchange Companies should also immediately bring any/such errors/omissions to the notice of the Director, Exchange Policy Department, SBP, Karachi for rectification.
