Post by Sapphire Capital on Jul 30, 2008 1:59:09 GMT 4
(i) Under the existing instructions, the Authorised Dealers (Banks authorised to deal in foreign exchange) without the prior approval of the State Bank, open foreign currency accounts of the following:
a) Pakistan Nationals resident in or outside Pakistan, including those having a dual nationality.
b) All foreign nationals, whether residing abroad or in Pakistan.
c) Joint Account in the names of residents and non-residents.
d) All diplomatic missions accredited to Pakistan, and their Diplomatic Officers.
e) All International Organizations in Pakistan.
f) Firms and companies established/incorporated and functioning in Pakistan, including those having foreign share-holdings except as outlined in sub-para (v) below.
g) Charitable Trusts, Foundations etc. which are exempted from income tax.
h) Branches of foreign firms and companies in Pakistan.
i) Non-resident Exchange Companies even if owned by a bank or financial institution.
j) All foreign firms/corporations, other than banks and financial institutions owned by Banks, incorporated and operating abroad provided these are owned by persons who are otherwise eligible to open foreign currency accounts.
However, the facility is not available to airlines operating in/through Pakistan or collecting passage and freight in Pakistan and the investment banks, leasing companies and modaraba companies including those which have been granted licences to deal in foreign exchange.
(ii) Opening of foreign currency account covered by sub-para (i) is subject to the condition that these are not fed with:
a) any foreign exchange borrowed under any general or specific permission given by the State Bank, unless otherwise permitted;
b) any payment for goods exported from Pakistan;
c) proceeds of securities issued or sold to non-residents;
d) any payment received for services rendered in or from Pakistan;
e) earnings or profits of the overseas offices or branches of Pakistani firms and companies including banks, investment of resident Pakistanis abroad; and
f) any foreign exchange purchased from an Authorised Dealer in Pakistan for any purpose.
(iii) Corporate Bodies/Legal entities cannot generate funds from the Kerb market for deposit in their foreign currency accounts.
(iv) Foreign currency accounts can be fed by remittances received from abroad, travellers cheques issued outside Pakistan (whether in the name of account holder or in the name of any other person), foreign currency notes and foreign exchange generated by encashment of securities issued by the Government of Pakistan.
(v) Opening by firms/companies of foreign currency accounts, which are to be fed through the funds of foreign equity/foreign currency loans raised for establishment of industrial and other projects and by contractors who receive payments in foreign exchange from the employers, would be as per procedure laid down in paragraph 8 of this chapter.
(vi) These accounts are free from all Foreign Exchange restrictions. In other words, account holders have full freedom to operate on their accounts to the extent of the balance available in the accounts either for local payments in Rupees or for remittance to any country and for any purpose or for withdrawals in the shape of foreign currency notes and travellers cheques. However, a restriction was placed on withdrawal in foreign currency from some categories of foreign currency accounts existing as on 28th May, 1998. The instructions issued vide FE Circular No.12 of 1998, as amended from time to time, would continue to be operative, till the restrictions are lifted. Holders of such accounts are, however, free to transfer their accounts from one Authorised Dealer to another.
(vii) Accounts can be maintained and payments (excluding local payments) made in any currency of choice of the account holder. Credit Card facility can be obtained by the account holders to the extent of the balances held in their respective accounts, for utilization in and outside Pakistan provided settlement of the bills in respect of expenditure within the country is made in Rupees only and the relevant foreign currency amount is taken by the Authorised Dealers in their daily exchange position.
(viii) Authorised Dealers can mark lien on the foreign currency accounts of the account holder and third party in respect of banking facilities like credit cards, bank guarantees and loan/credit etc. availed of by the account holders in and outside Pakistan. The aggregate amount of the facilities availed of in and outside Pakistan should not, however, exceed the balance in the respective accounts at any point of time and the regulations on credit should be strictly adhered to.
(ix) Head/Principal Offices of Authorised Dealers will send to the State Bank of Pakistan/SBP Banking Services Corporation, Karachi such returns in respect of these foreign currency accounts as may be prescribed from time to time.
(x) The Authorised Dealers are free to decide, as per Prudential Regulations in force, the rate of return on these accounts payable to the depositors. They are also free to recover reasonable bank charges on handling cash transactions in foreign currencies received into or paid out of such accounts.
(xi) The non-residents are exempted from payment of withholding tax and compulsory deduction of Zakat. Withdrawals from these accounts in the shape of cash currency notes is allowed and account holder is at liberty to make remittances from his account to the extent of his balance in his account.
2.Special Foreign Currency Accounts of Private Power Projects.
(i) Authorised Dealers may open the following Special Foreign Currency Accounts/Off-shore Foreign Currency Accounts of private power projects in Pakistan as per the Implementation Agreements (IAs) entered into with Private Power and Infrastructure Board (PPIB), Government of Pakistan. These accounts will be maintained during the construction and operation of the projects for the following purposes subject to the conditions mentioned against each and the balances held in such accounts will be retained by the Authorised Dealers in addition to their Exposure Limits and will also not be required to be reported under F.E. 25 Scheme:
a) Special Foreign Currency Account in or outside Pakistan.
This will be maintained for deposit of foreign equity and foreign currency loan under the Loan Agreement registered with the State Bank/SBP Banking Services Corporation. The amounts available therein will be utilized for the purposes of the project as provided for in the IAs.
b) Special Foreign Currency Insurance Account.
This will be maintained for depositing amounts required for payment of insurance/reinsurance premia and for receiving insurance/reinsurance claims against covers taken in foreign currency outside Pakistan with the approval of the Controller of Insurance or with State Bank’s/SBP Banking Services Corporation’s approval from an insurer in Pakistan, provided that amounts not required for meeting expenditure in foreign exchange will be repatriated to Pakistan and converted into rupees.
c) Off-Shore Foreign Currency Control Account.
This will be maintained subject to the condition that PPIB/Independent Engineer would determine for each project the portion of revenues required to meet the foreign currency cost for operating the project.
d) Off-Shore Foreign Currency Operating Account.
This will be maintained subject to the condition that O&M expenses to be remitted/deposited periodically to this account will be apportioned by the PPIB/Independent Engineer.
e) Off-Shore Disputed Payment Escrow Account.
This will be maintained subject to the condition that the balance will be remitted to Pakistan once the dispute is over.
f) Off-Shore Foreign Currency Debt Payment Account.
This will be maintained for depositing the amount required for Debt Service.
g) Off-Shore Debt Service Reserve Account.
This will be maintained subject to the condition that this account will be liquidated simultaneously with the retirement of debt and the maximum balance in this account would not exceed the next 12 months Debt Service Payment (both Principal and Interest).
h) Off-Shore Foreign Currency Maintenance Reserve Account.
This will be opened and maintained subject to the condition that this amount will be liquidated simultaneously with the life of the agreement and that this account will hold the maximum of US$ 3 million during the term of Power Purchase Agreement.
i) Off-Shore Foreign Currency Dividend Account.
This will be used for receiving remittance of dividends as and when declared and paid by the company.
(ii) Interest earned on balances held in these accounts will be repatriated to Pakistan.
(iv) There will be nil balance in the Main Control Account and all other accounts after the expiry of the relevant Agreement Period.
(v) Any earnings from dealing in currency/exchange should also be repatriated to Pakistan.
(vi) Authorised Dealers will ensure that Income Tax, wherever due on payments made through the accounts, is duly deducted and paid to the Income Tax Authorities.
(vii) Authorised Dealers may also open Special Foreign Currency Accounts of the foreign EPC (Engineering, Procurement and Construction) and O&M (Operation and Maintenance) contractors of the Power Projects operating in Pakistan with the approval of the Government for receipt of foreign currency amounts under the contracts awarded to them by the Power Projects and its utilization in accordance with the EPC/O&M contracts.
3.Special permission for Foreign Currency Accounts.
(i) Foreign Oil/Mineral exploration companies and foreign contractors and their foreign sub-contractors may be allowed by the Authorised Dealers to open foreign currency accounts under the Scheme described in paragraph 6 or Special Foreign Currency Accounts subject to the condition that they will meet all their expenditure in Pakistan including salaries of foreign nationals/non-residents in Pak Rupees only, out of rupee payments, if any, received by them in terms of their contracts/by converting in the inter-bank market funds received from their Head Offices/by converting funds from their foreign currency accounts in the inter-bank market.
(ii) Firms and companies raising foreign equity and foreign currency loan may be allowed by Authorised Dealers to open special foreign currency account for receiving and retaining the foreign funds on submission of information about the source of foreign funding and the amount required to be retained in foreign currency. The funds available in such foreign currency accounts can be used by the account holders for making only those types of payments which are otherwise permissible in terms of the instructions laid down in this Manual (e.g. imports, consultancy) and which are related to the business of the account holder. Any amount not so used will be required to be converted into rupees in the inter-bank market and no withdrawal will be allowed in the shape of foreign currency notes.
4.General permission for Maintenance of Accounts abroad by Resident Pakistanis.
Pakistan nationals resident in Pakistan are permitted to open or maintain any foreign currency accounts with banks etc., outside Pakistan, in any country other than Afghanistan, Bangladesh, India and Israel.
5.Payments by Foreign Nationals in Foreign Currencies.
Payments in foreign currency by foreign nationals residing in Pakistan to or on behalf of residents of Pakistan whether Pakistanis or foreign nationals are prohibited. Foreign nationals should not, therefore, directly or indirectly, make foreign currency available to the residents or to other persons on their behalf against payment in Rupees. Such payments are prohibited even from their foreign currency accounts which they are permitted to maintain and operate from Pakistan.
6.Foreign Exchange received by Residents in Pakistan.
Payments in foreign exchange received by an Authorised Dealer on behalf of a resident in Pakistan must not be retained in foreign exchange but must be converted into Rupees unless the State Bank has given general or special permission to the beneficiary to retain the foreign exchange received by him.
Accounts of Diplomatic Missions and International Organisations etc.
The Diplomatic Missions’ staff in Pakistan, their Diplomatic Officers and home based members of the Missions’ staff in Pakistan, as also all international organizations in Pakistan and their expatriate employees are allowed to open foreign currency accounts under the above Foreign Currency Accounts Scheme for the purpose of receiving funds from abroad.
a) Pakistan Nationals resident in or outside Pakistan, including those having a dual nationality.
b) All foreign nationals, whether residing abroad or in Pakistan.
c) Joint Account in the names of residents and non-residents.
d) All diplomatic missions accredited to Pakistan, and their Diplomatic Officers.
e) All International Organizations in Pakistan.
f) Firms and companies established/incorporated and functioning in Pakistan, including those having foreign share-holdings except as outlined in sub-para (v) below.
g) Charitable Trusts, Foundations etc. which are exempted from income tax.
h) Branches of foreign firms and companies in Pakistan.
i) Non-resident Exchange Companies even if owned by a bank or financial institution.
j) All foreign firms/corporations, other than banks and financial institutions owned by Banks, incorporated and operating abroad provided these are owned by persons who are otherwise eligible to open foreign currency accounts.
However, the facility is not available to airlines operating in/through Pakistan or collecting passage and freight in Pakistan and the investment banks, leasing companies and modaraba companies including those which have been granted licences to deal in foreign exchange.
(ii) Opening of foreign currency account covered by sub-para (i) is subject to the condition that these are not fed with:
a) any foreign exchange borrowed under any general or specific permission given by the State Bank, unless otherwise permitted;
b) any payment for goods exported from Pakistan;
c) proceeds of securities issued or sold to non-residents;
d) any payment received for services rendered in or from Pakistan;
e) earnings or profits of the overseas offices or branches of Pakistani firms and companies including banks, investment of resident Pakistanis abroad; and
f) any foreign exchange purchased from an Authorised Dealer in Pakistan for any purpose.
(iii) Corporate Bodies/Legal entities cannot generate funds from the Kerb market for deposit in their foreign currency accounts.
(iv) Foreign currency accounts can be fed by remittances received from abroad, travellers cheques issued outside Pakistan (whether in the name of account holder or in the name of any other person), foreign currency notes and foreign exchange generated by encashment of securities issued by the Government of Pakistan.
(v) Opening by firms/companies of foreign currency accounts, which are to be fed through the funds of foreign equity/foreign currency loans raised for establishment of industrial and other projects and by contractors who receive payments in foreign exchange from the employers, would be as per procedure laid down in paragraph 8 of this chapter.
(vi) These accounts are free from all Foreign Exchange restrictions. In other words, account holders have full freedom to operate on their accounts to the extent of the balance available in the accounts either for local payments in Rupees or for remittance to any country and for any purpose or for withdrawals in the shape of foreign currency notes and travellers cheques. However, a restriction was placed on withdrawal in foreign currency from some categories of foreign currency accounts existing as on 28th May, 1998. The instructions issued vide FE Circular No.12 of 1998, as amended from time to time, would continue to be operative, till the restrictions are lifted. Holders of such accounts are, however, free to transfer their accounts from one Authorised Dealer to another.
(vii) Accounts can be maintained and payments (excluding local payments) made in any currency of choice of the account holder. Credit Card facility can be obtained by the account holders to the extent of the balances held in their respective accounts, for utilization in and outside Pakistan provided settlement of the bills in respect of expenditure within the country is made in Rupees only and the relevant foreign currency amount is taken by the Authorised Dealers in their daily exchange position.
(viii) Authorised Dealers can mark lien on the foreign currency accounts of the account holder and third party in respect of banking facilities like credit cards, bank guarantees and loan/credit etc. availed of by the account holders in and outside Pakistan. The aggregate amount of the facilities availed of in and outside Pakistan should not, however, exceed the balance in the respective accounts at any point of time and the regulations on credit should be strictly adhered to.
(ix) Head/Principal Offices of Authorised Dealers will send to the State Bank of Pakistan/SBP Banking Services Corporation, Karachi such returns in respect of these foreign currency accounts as may be prescribed from time to time.
(x) The Authorised Dealers are free to decide, as per Prudential Regulations in force, the rate of return on these accounts payable to the depositors. They are also free to recover reasonable bank charges on handling cash transactions in foreign currencies received into or paid out of such accounts.
(xi) The non-residents are exempted from payment of withholding tax and compulsory deduction of Zakat. Withdrawals from these accounts in the shape of cash currency notes is allowed and account holder is at liberty to make remittances from his account to the extent of his balance in his account.
2.Special Foreign Currency Accounts of Private Power Projects.
(i) Authorised Dealers may open the following Special Foreign Currency Accounts/Off-shore Foreign Currency Accounts of private power projects in Pakistan as per the Implementation Agreements (IAs) entered into with Private Power and Infrastructure Board (PPIB), Government of Pakistan. These accounts will be maintained during the construction and operation of the projects for the following purposes subject to the conditions mentioned against each and the balances held in such accounts will be retained by the Authorised Dealers in addition to their Exposure Limits and will also not be required to be reported under F.E. 25 Scheme:
a) Special Foreign Currency Account in or outside Pakistan.
This will be maintained for deposit of foreign equity and foreign currency loan under the Loan Agreement registered with the State Bank/SBP Banking Services Corporation. The amounts available therein will be utilized for the purposes of the project as provided for in the IAs.
b) Special Foreign Currency Insurance Account.
This will be maintained for depositing amounts required for payment of insurance/reinsurance premia and for receiving insurance/reinsurance claims against covers taken in foreign currency outside Pakistan with the approval of the Controller of Insurance or with State Bank’s/SBP Banking Services Corporation’s approval from an insurer in Pakistan, provided that amounts not required for meeting expenditure in foreign exchange will be repatriated to Pakistan and converted into rupees.
c) Off-Shore Foreign Currency Control Account.
This will be maintained subject to the condition that PPIB/Independent Engineer would determine for each project the portion of revenues required to meet the foreign currency cost for operating the project.
d) Off-Shore Foreign Currency Operating Account.
This will be maintained subject to the condition that O&M expenses to be remitted/deposited periodically to this account will be apportioned by the PPIB/Independent Engineer.
e) Off-Shore Disputed Payment Escrow Account.
This will be maintained subject to the condition that the balance will be remitted to Pakistan once the dispute is over.
f) Off-Shore Foreign Currency Debt Payment Account.
This will be maintained for depositing the amount required for Debt Service.
g) Off-Shore Debt Service Reserve Account.
This will be maintained subject to the condition that this account will be liquidated simultaneously with the retirement of debt and the maximum balance in this account would not exceed the next 12 months Debt Service Payment (both Principal and Interest).
h) Off-Shore Foreign Currency Maintenance Reserve Account.
This will be opened and maintained subject to the condition that this amount will be liquidated simultaneously with the life of the agreement and that this account will hold the maximum of US$ 3 million during the term of Power Purchase Agreement.
i) Off-Shore Foreign Currency Dividend Account.
This will be used for receiving remittance of dividends as and when declared and paid by the company.
(ii) Interest earned on balances held in these accounts will be repatriated to Pakistan.
(iv) There will be nil balance in the Main Control Account and all other accounts after the expiry of the relevant Agreement Period.
(v) Any earnings from dealing in currency/exchange should also be repatriated to Pakistan.
(vi) Authorised Dealers will ensure that Income Tax, wherever due on payments made through the accounts, is duly deducted and paid to the Income Tax Authorities.
(vii) Authorised Dealers may also open Special Foreign Currency Accounts of the foreign EPC (Engineering, Procurement and Construction) and O&M (Operation and Maintenance) contractors of the Power Projects operating in Pakistan with the approval of the Government for receipt of foreign currency amounts under the contracts awarded to them by the Power Projects and its utilization in accordance with the EPC/O&M contracts.
3.Special permission for Foreign Currency Accounts.
(i) Foreign Oil/Mineral exploration companies and foreign contractors and their foreign sub-contractors may be allowed by the Authorised Dealers to open foreign currency accounts under the Scheme described in paragraph 6 or Special Foreign Currency Accounts subject to the condition that they will meet all their expenditure in Pakistan including salaries of foreign nationals/non-residents in Pak Rupees only, out of rupee payments, if any, received by them in terms of their contracts/by converting in the inter-bank market funds received from their Head Offices/by converting funds from their foreign currency accounts in the inter-bank market.
(ii) Firms and companies raising foreign equity and foreign currency loan may be allowed by Authorised Dealers to open special foreign currency account for receiving and retaining the foreign funds on submission of information about the source of foreign funding and the amount required to be retained in foreign currency. The funds available in such foreign currency accounts can be used by the account holders for making only those types of payments which are otherwise permissible in terms of the instructions laid down in this Manual (e.g. imports, consultancy) and which are related to the business of the account holder. Any amount not so used will be required to be converted into rupees in the inter-bank market and no withdrawal will be allowed in the shape of foreign currency notes.
4.General permission for Maintenance of Accounts abroad by Resident Pakistanis.
Pakistan nationals resident in Pakistan are permitted to open or maintain any foreign currency accounts with banks etc., outside Pakistan, in any country other than Afghanistan, Bangladesh, India and Israel.
5.Payments by Foreign Nationals in Foreign Currencies.
Payments in foreign currency by foreign nationals residing in Pakistan to or on behalf of residents of Pakistan whether Pakistanis or foreign nationals are prohibited. Foreign nationals should not, therefore, directly or indirectly, make foreign currency available to the residents or to other persons on their behalf against payment in Rupees. Such payments are prohibited even from their foreign currency accounts which they are permitted to maintain and operate from Pakistan.
6.Foreign Exchange received by Residents in Pakistan.
Payments in foreign exchange received by an Authorised Dealer on behalf of a resident in Pakistan must not be retained in foreign exchange but must be converted into Rupees unless the State Bank has given general or special permission to the beneficiary to retain the foreign exchange received by him.
Accounts of Diplomatic Missions and International Organisations etc.
The Diplomatic Missions’ staff in Pakistan, their Diplomatic Officers and home based members of the Missions’ staff in Pakistan, as also all international organizations in Pakistan and their expatriate employees are allowed to open foreign currency accounts under the above Foreign Currency Accounts Scheme for the purpose of receiving funds from abroad.