KARACHI, June 22: The State Bank has decided to allow three, four and five-star hotels to deal in foreign currencies initially for three years with certain restrictions. The Exchange Policy Department of the SBP issued a circular (FE no 07) on Tuesday that envisages the details of the scheme.

The circular says three, four and five-star hotels may apply to the SBP for seeking permission to deal in foreign exchange through Pakistan Hotels Association or PHA. The Association would ascertain the status of the hotel and forward the application to Exchange Policy Department of SBP.

The application should contain full particulars like name and address of the hotel showing its status, name and address of the proprietors/partners/directors, etc.

The applicants for the grant of restricted permission to deal in foreign exchange would also produce the copy of National Tax Number or NTN certificate of the hotel and copies of computerized National Identity Cards of the proprietors/partners/directors.

The SBP circular does not give the rationale for allowing restricted permission to three, four and five-star hotels to deal in foreign exchange. But it is obviously part of the strategy to further liberalize the foreign exchange regime in Pakistan on the insistence of the IMF/World Bank.

Besides, it seems aimed at promoting tourism industry by offering a targeted facility to the overseas visitors. This has become all the more necessary as money changers have been asked to pack up and quit their business by June 30 and form mini exchange companies instead.

The circular says that the restricted permission to be given to hotels for dealing in foreign exchange would be subject to the following terms and conditions:

(i) Hotels' activities would be restricted to purchase or encashment of foreign currency notes, coins and traveller cheques or TCS from the hotels' customers only.

(ii) Hotels would surrender within one week, the currency notes, TCs received by them, to a bank against which proper encashment receipts and records should be maintained.

(iii) Hotels shall not be allowed to remit such foreign currencies or use the same for their own settlement purposes.

(iv) Encashment of foreign currency/payments of bills, etc., by the customers should be supported by receipts/vouchers for all transactions.

(v) Hotels shall display at a prominent place over the payment counter the rates of foreign currencies applicable to purchase.

(vi) The counters of the hotels should be equipped with electronic cash register or any other suitable electronic device for issuing serially numbered receipts against purchase of foreign currencies from the customers.

(vii) Hotels shall be bound by the rules and regulations prescribed by the State Bank from time to time. Any deviation from or violation of such rules may result in penalty, suspension or cancellation of the permission given to them for dealing in foreign exchange.

(viii) All foreign currency purchases by the hotels will be at their own risk and responsibility.

(ix) Hotels shall maintain proper books of accounts and upon SBP directive, provide all data, information, books of accounts and all related record of their foreign exchange transactions.

(x) The hotels will also submit a monthly statement of the purchase of foreign exchange by 10th of subsequent month to the SBP.

(xi) The SBP shall have the powers to visit the premises, inspect the records/books of accounts of the hotels.

(xii) The SBP will withdraw its permission given to a hotel for dealing in foreign exchange if it (a) fails to submit monthly statements of purchases of foreign currencies or (b) fails to surrender foreign currencies purchased/ accepted to a bank within one week.