KARACHI, Feb 19: The State Bank has allowed shipping companies to open and operate foreign currency accounts in Pakistan for receipts and payments of foreign exchange.

But a circular (F.E. 05) issued to all banks on Tuesday makes it clear that cash withdrawals would not be allowed from such accounts and all withdrawals in rupee would be at the inter-bank rate. The circular also makes it clear that shipping companies maintaining such accounts would have to meet all the reporting requirements that are applicable on them for maintaining foreign currency accounts abroad.

Following is the text of the permission:

“Ship owners, charterers and operators and/or owners, charterers and operators of all floating crafts including tugs, dredgers, survey vessels and other specialized crafts may open and operate foreign currency accounts in Pakistan.”

“They will be permitted to operate these accounts for both receipts and payments of foreign exchange. Such foreign currency account holders may retain their surplus earnings in these accounts and shall surrender the same within three months of closing of the financial year.”

“Foreign partners in Pakistan based join venture companies may receive their share of profits after tax.”

Vice chairman of ports and shipping sub-committee of FPCCI, Masud Baghpati says the SBP move would help the private sector shipping companies grow. “It is a very encouraging move. It will help the private shipping companies take start chartering foreign vessels, thereby, reducing the workload of PNSC,” Baghpati said when reached by Dawn over telephone.

Till now private sector shipping companies were not able to charter foreign vessels because they could not make payments to vessel owners in foreign currency. As they can now open foreign currency accounts they can make payments for chartering vessels.

The SBP permission to shipping companies for opening foreign currency accounts is another step towards further liberalization of foreign exchange regime. Only recently the SBP has liberalized selling of foreign exchange by banks to those travelling abroad.