SBP issues clarification regarding the new Foreign Currency Account Rules 2020

The goal of these new regulations is to provide a regulatory framework for the operation of individual accounts holding foreign currency.

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The State Bank of Pakistan has issued an explanation for the ‘Foreign Currency Account Rules 2020’. On the 6th of October 2020, the federal government issued a set of regulations for bank accounts with foreign currency under the provisions of the ‘Protection of Economic Reforms Act, 1992’.

Although there was a lot of confusion regarding the changes following the news, the state bank has clarified that have been zero changes in the general or special permissions given by the SBP to individuals under these new regulations.

According to paragraph iv, Chapter 6 of the Foreign Exchange Manual, travelers’ cheques issued outside of Pakistan, encashment of securities issued by the Pakistani government, and remittances received from abroad can be fed into foreign currency accounts.

A foreign currency account of a citizen residing in Pakistan can also be fed with foreign currency, if only the account holder is a filer, as defined in the Income Tax Ordinance of 2001.

The goal of these new regulations is to provide a regulatory framework for the operation of individual accounts holding foreign currency. A structure of this type is a representation of SBP’s effort to strengthen the foreign exchange regime and make it more market-oriented.

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