KARACHI, Nov 22: If you are travelling abroad for any purpose you are now free to buy from the banks as much foreign exchange as you need at the inter-bank exchange rate.

Earlier, people travelling abroad used to get a fixed quota of foreign exchange from the inter-bank market: they could buy only $2100 per year for private visits and $9000 per year for business visits abroad.

The State Bank on Thursday allowed the banks to sell as much foreign exchange to people going abroad as may be needed by them. But it made it clear that before doing so the banks should satisfy themselves about the genuineness of the requirement of the travellers by verifying the documentary evidences provided by them. Bankers said in doing so, they would not need to take prior SBP permission.

The SBP made this announcement through a circular (F.E. 21). The circular said the decision to allow liberal release of foreign exchange to people travelling abroad was taken “with a view to further liberalizing the foreign exchange activities.”

The one-paragraph circular gave no details but bankers said the SBP decision would enable the following categories of people to buy foreign exchange from the inter-bank market according to their genuine requirement:

(i) People travelling for private or business visits abroad including government servants and employees of semi-government institutions.

(ii) Journalists and others travelling abroad to participate in international events.

(iii) People travelling abroad for professional training or for Tabligh (spreading the message of Islam).

(iv) Persons proceeding abroad for medical treatment.

(v) Government/semi-government employees travelling abroad on duty or training or on posting or retirement—and on leave. Also those employees travelling abroad as members of some delegations.

(vi) Persons proceeding on migration abroad.

(vii) People going abroad on business visits.

(viii) Representatives of consultancy/construction companies and firms.

(ix) Traders travelling abroad with along with sample goods and businessmen proceeding abroad to take part in fairs and exhibitions.

(x) Exporters as well as non-exporter business executives of firms or companies desiring to get foreign exchange against credit cards.

(xi) Students travelling abroad to study; and

(xii) Students already staying abroad for studies would now get foreign exchange bought from the inter-bank market and remitted to them by their relatives or friends.

FAST LIBERALIZATION: The SBP decision to lift curbs on the sale of foreign exchange by banks to people travelling abroad came just a day after it had allowed the banks to buy or sell foreign exchange between themselves without any commercial transaction on the back. Senior bankers say the two decisions indicate that the liberalization of foreign exchange regime is taking place much faster than expected. What makes it possible for the State Bank to move faster in this area is that the gap between the inter-bank and open market exchange rates has come down from more than Rs2 per dollar before September 11 to less than Re1 per dollar now. “The lesser the gap between the two exchange rates the lesser would be the chances of misuse (of liberal foreign exchange regime),” said a senior banker.