KARACHI, May 8: As the deadline of June 30 draws near, money changers refuse to give up their identity and their leaders threaten to take to the street if forced to pull down shutters.

"All 378 licensed money changers are ready to take to the street if forced to close their businesses," warns chairman of Karachi chapter of Money Changers Action Committee Mr. Muhammad Hanif Gohar. "We are also preparing to move Supreme Court to ensure that the authorities do not snatch our bread and butter," he told Dawn in a telephone interview.

Mr Gohar was asked what money changers plan to do after June 30-the deadline set for them to convert their businesses into foreign exchange companies or seek franchise with the existing ones.

"We want to keep our identity intact and operate side by side with foreign exchange companies (though) at a different level," he said. "The State Bank may allow us to operate as B category of exchange companies with the restriction that we will deal only in cash."

Mr. Gohar said a 22-member delegation of Money Changers Action Committee took this stand at a meeting with State Bank Governor Dr. Ishrat Husain here on Saturday. "Dr. Husain was sympathetic to our demand and he has promised to consider this once we make a formal presentation on this issue."

He said the Action Committee would make the presentation next week.

SBP sources say Dr Husain and his colleagues held three brain -storming sessions on Saturday to sort out the issue of money changers status after June 30, 2004.

They first met heads of foreign exchange companies and money changers separately and then held a tripartite session to fine- tune the discussions made earlier.

Participants of these meetings said Dr Husain made it clear that the central bank would not extend the deadline of June 30. "This clearly implied that money changers will have to convert their business into foreign exchange companies or get franchise with any of the existing ones," said head of one such company.

"The way the governor asked money changers to give concrete proposal about what they call B category status did not imply that the deadline would be extended."

Participants of the meetings said the SBP chief showed concern about the failure of foreign exchange companies to branch out their businesses across Pakistan and give speedy franchise to the desiring money changers. There are 40 branches of 12 foreign exchange companies in operation out of which 24 are located in Karachi. Dr Husain advised heads of exchange companies to set up more branches outside Karachi.

He also took note of the fact that many exchange companies are dilly-delaying the issue of franchising out their business to money changers and some of them were offering this facility with too tough conditions. Mr. Hanif Gohar told Dawn that one large Karachi-based exchange company wanted a money changer to have a capital base of Rs10 million to qualify for the franchise. "When I brought this to the notice of the governor he was shocked for the simple reason that SBP has allowed money changers to operate with a capital base of Rs2-5 million." Those who run a single branch are supposed to have Rs2 million capital and those running multiple branches Rs5 million. Exchange companies operate with a minimum capital of Rs100 million.

The SBP chief told the representative of that exchange company that this negated the spirit of the newspaper ads his company has splashed lately inviting franchise proposals from money changers.

But participants of the meetings said this was a stray case and generally exchange companies were willing to franchise their business to money changers on easier terms. "I even proposed that those money changers who just want to deal in cash can seek our franchise against no capital," said chief executive of H&H Exchange Company Haji Haroon who also heads Exchange Companies Association of Pakistan or ECAP.

Some money changers said that if other exchange companies also offer a similar package there will be little justification for money changers to demand a separate status but they refused to go on record.