KARACHI, March 20: The Forex Association of Pakistan that loosely groups 300-400 money changers in Pakistan has reminded them that they now need to get franchise from a foreign exchange company if they want to legally operate after June 30, 2004.
The State Bank has set June 30 as the deadline for the money changers to convert themselves as foreign exchange companies or get franchise from any of such companies already working. At present more than a dozen foreign exchange companies are in operation and the number would surely rise before the deadline is over.
But money changers say not many of them would convert their businesses into foreign exchange companies that require them to come up with a minimum paid-up capital of Rs100 million. They say the majority of the 300-400 licensed money changers would either seek franchise from existing foreign exchange companies or they too may join those 2000 plus that have been operating illegally.
"I have asked my colleagues (the licensed money changers) to seek franchise from an existing exchange company before June 30," said FAP president Malik Bostan, who has recently set up Pakistan Currency Exchange after giving up the status of a money changer.
"The money changer keen on getting franchise from an existing exchange company and the company would be free to decide about the amount that the money changer is required to deposit with the franchiser," he told Dawn. "But the money changer seeking such franchise would have no bindings relating to the paid-up capital."
He said he had met SBP executive director Farhat Saeed and director of Exchange Policy Department M. R. Mehkari on Friday to seek SBP help in removing some bottlenecks in the way of franchising by exchange companies where this and other issues were discussed.
He said he had also got an assurance from the SBP that it would complete the process of allowing a franchise within 15 days after receiving a request seeking its NOC. "Then the money changer would be allowed to start business as a booth of the foreign exchange company it has got franchise from," he said.
"But the SBP has made it clear that it would reserve the right of conducting a surprise inspection of the booth anytime to see that its workings are within the rules of the game."
The SBP has already issued several warnings to money changers that they must convert their businesses into foreign exchange companies by June 30, 2004. Now with a similar warning coming from the FAP that has so far represented money changers "it seems almost certain that the deadline would not be extended further," said head of a foreign exchange company.
Malik Bostan said out of more than a dozen foreign exchange companies in operation the following are willing to offer franchise to money changers: H&H Exchange Company, Galaxy International, KKI Exchange Company, Data Exchange Company, Pakistan Currency Exchange, Wall Street Exchange Company, Eastern Union Exchange Company, and Dollar East Exchange Company.
The money changers interested in seeking franchise from any of these companies should contact them.