KARACHI, June 5: The State Bank of Pakistan has decided to give some relaxations to existing authorized money changers -378 in number - for the setting up of B category Exchange Companies or mini exchange companies.

According to relaxations allowed, the minimum paid up capital requirement for the establishment of this kind of exchange companies has been reduced to Rs20m from Rs25m.

However, they will have to raise their paid-up capital to Rs25 million by June 30, 2005, says a press release issued by the SBP on Saturday.

Besides, mini exchange companies will have to keep 10pc (instead of 15pc) of their paid-up capital as Reserve Requirement with the State Bank.

The SBP has also withdrawn the condition that required that at least 80pc of the existing money changers to opt for forming the mini exchange companies.

The SBP has allowed these relaxations after a detailed meeting between the representatives of the money changers and the SBP officials here on Saturday. SBP Executive Director Mr Farhat Saeed chaired the meeting.

Last month the SBP had decided in principle to allow setting up of mini exchange companies to bring the business of the existing money changers within the realm of Exchange Companies.

"It is reiterated that the licences of the existing money changers would stand expired as on June 30, 2004 and they would cease to function as Money Changers w.e.f. July 01, 2004," says the SBP release.

Other salient features of B category exchange companies would be as follows:

(1) They will be required to be incorporated with the SECP as a Private Limited Company.

(2) They will be allowed only to buy and sell foreign currency notes and coins.

(3) Only authorized money changers will be allowed to form 'B' category Exchange Companies.

(4) Application processing fee of Rs100,000 will be payable to the SBP, which would include permission to open up to 5 branches. For additional branches, the company will be required to pay an additional fee of Rs25,000 for each branch.

(5) It will be mandatory for a B category exchange company to accommodate at least 5 existing authorized money changers to join hands to form such a company.