The State Bank of Pakistan on Monday amended its rules regulating the expansion of the exchange firms. The new regulations notified by the regulator via a circular are aimed at simplifying the procedure of network expansion of the exchange companies and to consolidate existing instructions on network expansion. “The following policy is hereby circulated for meticulous compliance,” said the SBP circular.
1. Annual Network Expansion Plan (ANEP)
An Exchange Company (EC) desirous of opening new branches, franchises, payment booths and currency exchange booths shall submit an Annual Network Expansion Plan (ANEP) duly approved by its Board of Directors by 30th September of each year for the next calendar year (Jan-Dec) on prescribed format.
In-principle approval to ANEP for the next calendar year shall be granted by the Exchange Policy Department keeping in view the compliance status and inspection rating of the exchange company. In principle approval granted under ANEP shall be valid only for one year.
Financial Health, Corporate Governance, Anti Money Laundering Issues, future earnings prospects etc. shall form the eligibility criteria for approval of ANEP.
In case of non-compliant or marginally compliant exchange company, approval for network expansion may not be considered.
2. Capital Adequacy for Network Expansion
In addition to the criteria defined above, the following criteria related to capital adequacy shall be observed for network expansion:
Company’s Network:
Branch
Franchise
Payment Booth/Currency Exchange Booth
Rs. 5,000,000/- per branch
Rs. 3,000,000/- per franchise
Rs. 2,000,000/- per PB/CEB
It may, however, be noted that the above criteria is only for calculation of capital adequacy of the company in relation to their entire network. Exchange Companies shall be free to assign any amount of capital to any of their outlets.
3. Temporary Currency Exchange Booths at Haji Camps
In order to facilitate Haj Pilgrims, the exchange companies may establish their own Currency Exchange Booths (CEB) at Haji Camps during Haj Season, subject to the following terms and conditions:
For establishing the said booths at Haji Camps, an NOC will have to be obtained by the exchange company from Ministry of Religious Affairs prior to approaching SBP for approval.
The booths will be setup temporarily during Haj season only.
4. Relocation of Outlet
Exchange companies may relocate any of their outlets during the year within city/town under intimation to the State Bank of Pakistan. However, before commencement of operations at the new location, prior approval of the State Bank shall be required for which the company shall submit the related documents.
5. Closure
Exchange companies shall be free to close any of their existing outlets without obtaining prior permission of the State Bank. Information regarding closure of the outlet should be published in a leading newspaper at the time of closure and original license/permission letter of the outlet must be surrendered to SBP within 15 days from the date of closure.
6. Processing Fees
A processing fee of Rs. 25,000/- will be charged for each application for the establishment/relocation of each outlet. Exchange companies shall submit the above fees related to them and their franchises/third party PBs through DD/PO drawn in favor of the State Bank of Pakistan.
