KARACHI, Aug 10: No foreign party has so far shown interest in setting up foreign exchange company as a joint venture with local banks or money changers.
Bankers and money changers say they have so far not received inquiries from foreigners regarding foreign exchange companies.
One state-run bank and four money changers have so far applied for setting up foreign exchange companies but none of them has indicated about equity participation from abroad. “We have not been contacted by any foreign party for setting up the exchange company,” says Ovais Kalia whose company Khanani & Kalia International was the first amongst local money changers to apply for an exchange company.
“I have not even heard of any other money changer having been contacted by foreigners,” says Kalia.
President of Forex Association of Pakistan say it is too early for the foreigners to show interest in joint ventures for exchange companies. “They would like to see some local companies start operating and would then consider equity participation with them.”
The State Bank allows up to 50 per cent equity participation in setting foreign exchange companies that would replace local money changers in two years — and their primary job will be to handle the money sent back home by overseas Pakistanis.
So far only half a dozen parties have sought SBP clearance for setting up these companies. The parties are: National Bank, Khanani & Kalia International, KKI Exchange Pvt. Ltd, Dollar East, H&H Exchange Company, and Wall Street.
All the money changers listed above are regarded as top guns among 469 licensed money changers across Pakistan.
The others are either too small to apply for these companies whose paid-up capital requirement is Rs100 million — or are just waiting for lowering of the limit as demanded by Forex Association of Pakistan.
The association has asked the SBP to lower the paid-up capital requirement to Rs50 million — still ten times higher the present paid-up capital of Rs5 million for the money changers having more than one outlets. But the SBP seems unmoved by their appeal apparently because the scope of operations of the exchange companies would be much wider than that of the money changers — and would involve more risks.
“The reason why we have not applied is that it is ethically inappropriate as I am leading a campaign to get the required paid-up capital lowered,” says president of FAP Malik Bostan whose company Bostan International is not in the list of the money changers in the run for setting up exchange companies.
“I think the list will remain very short as the majority of money changers cannot afford to have a paid-up capital of Rs100 million,” he reiterated his stand. “Besides the margin that we expect on exchange companies business would not be too big to provide justification for this large paid-up capital base.”
Dawn inquiries show that half-a-dozen more parties may apply for setting up exchange companies. PICIC Commercial Bank and Galaxy International are two potential applicants.
Anwar Jamal of Galaxy International told Dawn his currency brokerage would apply for an exchange company within this month. A senior official of PICIC Commercial Bank had earlier told Dawn that the bank had sought the SBP clearance for setting up an exchange company but the SBP wanted some clarifications. No senior official of the bank or the SBP could be reached immediately to know when the application of the bank would be accepted.
