KARACHI, Sept 30: The State Bank has allowed foreign exchange companies to set up booths for making payments in local currency to those who receive workers' remittances or foreign exchange sent back home by overseas Pakistanis.

The companies will have to seek SBP approval before setting up these booths.

The Exchange Policy Department of the SBP has written a letter to all exchange companies that contains the formalities they will have to fulfil in this regard. The procedure outlined in the letter for setting up payment booths will be as under:

1. Exchange companies will enter into agreements with other entities /proprietors, etc., for setting up payment booths at their business premises. These agreements will incorporate the only permissible activity, terms & conditions, duties and liabilities of the parties concerned. The agreements will have to be approved in principal by the central bank.

2. Payment booths or outlets shall have a separate and identifiable set-up, which may consist of a glass or wooden cabin of an appropriate size within the premises of a well-known business entity.

3. Records of all transactions are required to be maintained, also for submission to the SBP.

4. Other than payments in local currency to the beneficiaries against home remittances payment booths shall not be allowed to undertake any other business activity.

5. Appropriate signboards must be displayed at such booths mentioning the words "Payment Booth" and the name of the exchange company. Prominent signs both in Urdu and English should be placed clearly indicating that the facility is "Restricted for payment of home remittances only."

6. For the purpose of a payment booth, a separate settlement account shall be opened/ maintained for the purposes of receiving credits from the exchange companies for onward payment of home remittances to the beneficiaries.

7. SBP shall hold the exchange company fully responsible for violation of related rules and shall have the right to take direct action against any or both the parties involved. Operations and records of payment booths will be subjected to SBP's inspection as and when considered appropriate by the SBP.