SBP launches three groups for invesment abroad

Published February 11, 2021
The State Bank of Pakistan (SBP) on Wednesday introduced three new categories of foreign investments under its revised policy governing equity investment abroad. ─ Wikimedia Commons/File
The State Bank of Pakistan (SBP) on Wednesday introduced three new categories of foreign investments under its revised policy governing equity investment abroad. ─ Wikimedia Commons/File

KARACHI: The State Bank of Pakistan (SBP) on Wednesday introduced three new categories of foreign investments under its revised policy governing equity investment abroad.

Banks have been authorised to allow remittances under the newly introduced categories, the SBP said, adding that it has “modernised the foreign exchange manual to facilitate startups, fintechs and exports”.

The central bank said the new categories were introduced after approval of the federal government. “The new policy for equity investment abroad will attract foreign direct investment (FDI) through the establishment of holding companies by Pakistani fintechs and startups; support exports by facilitating exporters to establish subsidiaries or branch offices outside Pakistan; and, allow resident Pakistanis to acquire equity,” said a circular issued by the SBP.

Move to facilitate startups, fintechs and exports

The changes in the foreign exchange regulations will facilitate portfolio investment in the country including mutual funds, Exchange Traded Funds (ETF) and Real Estate Investment Trust (REIT) Funds through Pak rupee-based Roshan Digital Account (RDA) and Special Convertible Rupee Account (SCRA).

The SBP’s revised policy will enable Pakistani Fintech and startup companies to channelise foreign direct investment in the country by establishing a holding company abroad against remittance of up to $10,000 and subsequent swapping of shares to mirror the shareholding of local company in the holding company.

The policy will enable the export oriented companies to establish subsidiary or branch office abroad against remittance of 10 per cent of their average annual export earnings of last three calendar years, or $100,000 whichever is higher.

The policy will allow the resident individuals of Pak­is­tan to acquire equity stake in international firms through share option plans or investment in listed securities.

Further, SBP has also allowed the private funds established and operated by Private Fund Management Companies licensed by the Securities and Exchange Companies of Pakistan to provide private equity and venture capital fund management services, to issue units of their funds to non-resident investors.

The SBP has also allowed the trading of units of funds quoted at ETF, REIT Funds and close-end mutual funds, through SCRA and PKR version of RDAs called the NRP-Non Resident Pakistanis-Rupee Value Account (NRVA).

Published in Dawn, February 11th, 2021

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Budget for stabilisation
Updated 13 Jun, 2024

Budget for stabilisation

The proposed steps lack any “disruptive policy changes", especially to "right-size" the govt, and doubts remain on authorities' ability to enforce new measures.
State of the economy
13 Jun, 2024

State of the economy

THE current fiscal year is but another year lost. Going by the new Pakistan Economic Survey, which maps the state of...
Unyielding onslaught
Updated 13 Jun, 2024

Unyielding onslaught

SEVEN soldiers paid the ultimate price in Lakki Marwat on Sunday when their vehicle was blown up in an IED attack,...
X diplomacy
Updated 12 Jun, 2024

X diplomacy

Both states can pursue adversarial policies, or come to the negotiating table and frankly discuss all outstanding issues, which can be tackled through dialogue.
Strange decisions
12 Jun, 2024

Strange decisions

THE ECP continues to wade deeper and deeper into controversy. Through its most recent decision, it had granted major...
Interest rate cut
Updated 11 Jun, 2024

Interest rate cut

The decision underscores SBP’s confidence that economic stability is gaining traction.