SBP new policy restricts cash dollar transactions

(Dunya News) - The State Bank of Pakistan has introduced strict guidelines for cash dollar transactions, wherein banks and exchange companies shall deposit foreign currency directly into the accounts of clients rather than handing over cash.

Through an SBP circular, it has announced revised rules to encourage a cashless financial system and enhanced monitoring of foreign exchange movement.

According to the new policy, all foreign currency sales to Pakistanis for deposit into foreign currency (FCY) accounts must be consummated through account-to-account transfers. This means buyers will no longer receive cash dollars; instead, the exchange companies will issue cheques or transfer the funds straight to the customer's FCY account. Individuals without such accounts will not be able to purchase cash dollars for depositing purposes.

Exchange companies explained that the policy would not prevent citizens from purchasing dollars for travel or personal reasons but said customers seeking to buy more than $500 cash have to provide supporting documentation, including a biometric verification and declaration of a purpose. Students, travelers, and pilgrims will be required to submit full paperwork for amounts greater than that.

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Industry observers point out that the new mechanism is bound to benefit bank-owned exchange companies as SBP keeps on encouraging their network expansion. The revised mechanism may drive more customers towards such outlets due to smoother transfer processes.

Currency dealers warn that the changes could slow processing times for those purchasing euros or pounds, with cheque clearances potentially taking up to 25 days if deposited in another bank. Even dollar transfers may require at least five days to settle.