Karachi August 5 2021: As Authorized Dealers are aware, the State Bank of Pakistan is in the process of revising the Foreign Exchange (FE) Manual in consultation with different stakeholders, including Authorized Dealers, in the phased manner.
In order to implement the revised policy on Royalty, Franchise and Technical Fee, Authorized Dealers shall set up a centralized unit to facilitate applicants. The unit shall be responsible for, inter alia, review and acknowledgment of RFT agreements, issuance of internal approval to respective branch for issuance of acknowledgment letter of the agreement as well as designation of the banker and maintenance of party wise record of agreements acknowledged and remittance effected there against. The said unit shall be staffed with officers well versed with foreign exchange regime headed by a senior officer. Authorized Dealers shall submit the compliance, in this regard, to this office within 15 days of issuance of this circular. The said unit shall ensure strict compliance with the provisions of policy during processing the cases and referring the cases to SBP where regulatory approval is required. In case non-compliance of the provisions of RFT policy is observed, appropriate enforcement action may be initiated against the delinquent Authorized Dealers under relevant provision of Foreign Exchange Regulation Act, 1947.
The internal Audit function of the Authorized Dealer shall also be required to conduct periodic risk based internal audit of commercial remittances allowed by the bank under various provisions of Chapter-14. The audit report shall also be presented to the audit committee of Board of Directors of the Authorized Dealer for information and necessary action, if any.
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Authorized Dealers are advised to bring the above development to the notice of all their constituents for meticulous compliance.
So far, thirteen chapters of the FE Manual have already been revised and made the following changes to .Commercial Remittances Chapter.
4A. Remittances of Container Detention Charges by Foreign Shipping Companies
New clause: Instructions on logistic/trade related remittances such as payment of Container Detention Charges, Demurrage Charges, Surplus Port Disbursement Funds, Disbursement of Cash to Master of Ship arriving at Pakistani Port, have been introduced with partial or complete delegation to Authorized Dealers.
- Charter of Foreign Ships and Aircrafts.
Amended: Regulations on remittance on account of chartering the foreign ships/aircrafts have been revised to delegate powers to Authorized Dealers to process requests for payment of charter cost direct to Owner/Operator/Commercial Operator of vessels/ships/tankers/aircraft.
- Remittance of Royalty/Franchise and Technical Service Fees.
Amended: Instructions on remittance of Royalty, Franchise and Technical Fee (RFT) have been revised to align them with current business environment. Further, in order to promote ease of doing business, function of processing requests for acknowledgment of RFT agreements has been delegated to Authorized Dealers along with detailed guidelines in the matter.
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- Remittance of Profits/ Head Office Expenses/ Winding up Proceeds by Branch/ Liaison Office of Foreign Banks & Companies.
Amended: Regulations on remittance of profit and head office expense by branches of foreign companies have been revised whereby function of processing such requests has been delegated to Authorized Dealers for the facilitation of stakeholders.