KARACHI, May 25: The State Bank said on Tuesday it had decided in principle to allow money-changers to establish B category exchange companies.
But, it reiterated its stand that all the licensed money-changers would have to stop their operations on or before June 30, 2004.
The main objective behind the establishment of exchange companies in category B "is to bring the existing licensed money-changers' business within the realm of exchange companies," the State Bank said in a press release.
The B category exchange companies (or mini exchange companies) would be allowed only to sell and purchase foreign currency notes and coins, said the release implying that they would not be allowed to make electronic transfer of foreign exchange.
These companies would function under the following broad outlines: They will be required to be incorporated with the Securities and Exchange Commission of Pakistan; only authorized (or licensed) money-changers may be allowed to form a B category exchange company; the minimum paid-up capital requirement will be Rs25 million; application processing fee of Rs100,000 will be payable to the SBP, which would include permission to open up to five branches; for additional branches, the company will be required to pay an additional fee of Rs25,000 for each branch; and it will be mandatory for a B category exchange company to accommodate at least five existing authorized money-changers to join hands to form such a company.
The SBP release says that the SBP decision to allow money-changers to set up B category exchange companies will also ensure documentation of their business in the country.
It says that detailed procedure for application for obtaining licences for mini exchange companies and applicable rules and regulations shall soon be conveyed through a circular.
Exchange Companies Association of Pakistan president Haji Haroon appreciated the SBP decision. "We welcome the SBP move and have no objection on money-changers taking up the role of mini exchange companies," he told Dawn.
General secretary, Karachi chapter of the Money Changers Action Committee, Haneef Gohar, said the committee would meet in Karachi on Wednesday to examine the pros and cons of the SBP decision. "We will give our reaction after the Wednesday meeting," he added.
