September 13, 2002	Friday	Rajab 5, 1423

KARACHI, Sept 12: State-run National Bank has got the SBP NOC to set up a foreign exchange company as a wholly owned subsidiary of the bank.

Two other applicants namely H&H of Karachi and Dollar East of Lahore have also got SBP permission to set up exchange companies, bankers and money changers told Dawn. Whereas Dollar East is already operating, H&H is the proposed name of a foreign exchange company whose main sponsors are the owners of Dubai Exchange.

Under the law those who had got NOCs from the SBP will now go to Securities & Exchange Commission of Pakistan for seeking incorporation as foreign exchange companies. Once the SECP allows their incorporation they will turn to SBP again and seek a final approval before starting operations. Bankers and money changers say the whole process might be over by the end of this year.

But technically speaking the NOCs issued by the SBP are valid for six months. Which means that the parties who have got these NOCs have six months time to approach SECP and seek incorporation as foreign exchange companies.

But bankers and money changers say the three parties that have so far received NOCs to set up exchange companies may seek incorporation as early as possible and start working as exchange companies from early next year. “We will file an application to SECP within this week,” said Haji Haroon of the proposed H&H exchange company.

The setting up of foreign exchange companies will complete a critical phase of consolidation of inter-bank and open foreign currency markets. The existing money changers are free to work parallel to exchange companies but they will have to convert their business into foreign exchange companies after two years.

Sources close to SBP say the NOCs to set up exchange companies have been issued with the condition that (i) internal controls of the exchange companies will be to the satisfaction of the State Band and (ii) computer technology used by them will be compatible with the system to be used by SBP.

It could not be learnt officially when the SBP will issue more NOCs to set up exchange companies and why exactly it is sitting on at least 19 other applications.

The NBP was the first to file an application with the SBP to set up an exchange company followed by PICIC Commercial Bank and half a dozen leading money changers.

The money changers who had sought SBP permission to set up exchange companies included such big names as (i) Khanani & Kalia International (ii) Wall Street (iii) Galaxy International.

Sources close to SBP say the central bank is vetting the applications of these and other parties and may shortly decide if they could get NOCs. “Chances are that some of them — maybe another two or three applicants may soon get these NOCS,” said a source close to SBP.