October 4, 2002	Friday	Rajab 26, 1423

KARACHI, Oct 3: Two more money changers and a duo of leading stock brokers have got clearance from the State Bank to set up foreign exchange companies. The money changers are: (i) Khanani & Kalia International and (ii) Galaxy International. The two stock brokers are: Aqeel Karim Dhedi and Dawood Jan Muhammad.

One of them said they planned to set up a new entity by the name of Global Exchange company (not to be mixed up with an existing company of the same title.)

Two money brokerages namely H&H (sponsored mainly by owners of Dubai Exchange) of Karachi and Dollar East of Lahore along with state-run National Bank have already got initial permission of the SBP to set up exchange companies.

“Initially we plan to open two outlets of our exchange company — one in Karachi and the other in Lahore,” Dawood Jan Muhammad said when reached by Dawn over telephone. He said the company would be owned jointly by him and AKD and have a paid-up capital of Rs200-300 million.

The minimum requirement is Rs100 million but Dawood feels given the nature of the operations of exchange companies this amount is too little.

Hanif Galaxy of Galaxy International told Dawn that he planned to convert the existing six branches of GI into the outlets of the GI exchange company adding that the paid-up capital of the company would be Rs100 million. All six GI branches are based in Karachi.

Both Dawood and Hanif said they would move Securities & Exchange Commission of Pakistan early next week for incorporation of GI and Global Exchange as foreign exchange companies.

Ovais Kalia of Khanani & Kalia International said that all the eight branches of KKI (five in Karachi; two in Lahore and one in Islamabad) would be converted into outlets of the proposed KKI exchange company. He said he would soon apply for incorporation of KKI as an exchange company with the SECP. He said the paid-up capital of the company would be Rs 100 million. Currently money changers are required to have a paltry paid-up capital of Rs5 million.

Exchange companies are being set up on the insistence of the IMF to bring transparency in inflows and outflows of foreign exchange through the companies other than the banks.

Unlike money changers, exchange companies would be allowed to deal in cash as well as electronic transfer of money and as such they will be able to handle home remittances along with banks.

The SBP has given two years time to all money changers for converting their businesses into exchange companies.

Under the law those who receive No Objection Certificates for setting up exchange companies by the SBP are required to apply for incorporation with SECP — and again come back to SBP to get a final permission to start operations. Bankers and money changers say all this may take a couple of months adding that the first exchange company is likely to go into operation by the close of this year or early next year.

The SBP had received about two dozen applications for setting up exchange companies out of which it has so far granted NOCs to only six. The process of screening more applications continues.