KARACHI: The State Bank has warned banks to either accept all kinds of US dollars (old and smaller denominations) or face penalty while assuring them of accepting such notes.

A meeting attended by representatives of about 30 banks and foreign exchange companies was held at the State Bank to find a solution to the problem of not accepting the old US dollar currency notes or offering reduced prices for the same by currency dealers.

The issue hit millions of Pakistanis who suffer losses in the shape of lower price of their dollar holdings.

The exchange companies have been offering 3-5 per cent less price for each old-designed US dollar as well as for smaller denomination on the grounds that banks do not accept them and they have to re-export them to Dubai for exchange which cost them 3-5pc extra.

The banks’ representatives denied at the meeting that they were not accepting the old US dollars, but the money changers kept insisting on the problem.

The people, particularly those operating foreign exchange accounts like overseas Pakistanis, have been complaining that banks give them old US dollars but do not accept the same in return.

“The State Bank has asked all banks to accept all kinds of US dollar notes and the SBP will accept them from banks,” said Zafar Paracha, secretary general of the Exchange Companies Association of Pakistan, who attended the meeting.

The SBP warned the banks that they would face penalty if they did not accept old or small denomination of US dollars like $10.

When the banks’ representatives pointed out that the State Bank accepted only $100 and $50 bill and refused to accept smaller denominations, the latter assured them that another meeting would be held soon to resolve this issue.

State Bank executive director Syed Irfan Ali Shah, who chaired the meeting, said the SBP provided fresh US dollar currency notes to all banks on subsidised rates and in the process bore all costs, including transportation and insurance, while importing them from United States.

The inter-bank market has a volume of about $4.5 billion.

Thousands of Pakistanis send dollars to their relatives, particularly children studying abroad, and they have to face hardship time and again. “This is true that exchange companies are charging 3pc extra on old-designed notes, but they have to pay the same amount in Dubai for exchanging these dollars,” said Malik Bostan, president of the Forex Association of Pakistan.

He said the customers had been suffering heavily because many exchange companies were charging up to 8pc more for old-designed notes. Mostly ‘B’ and ‘C’ category exchange companies are charging more than ‘A’ category ones, he added.

Published in Dawn, February 21st, 2017