The State Bank of Pakistan has warned banks and money exchange companies to accept older and smaller US dollar notes or they will face penalties. It was being observed that certain banks and money exchange companies were not entertaining the public when it came to the matter of old US dollar notes.
The issue of not accepting older or smaller denominations of the US dollars was discussed at a meeting at the State Bank. The meeting was attended by representatives of 30 banks and foreign exchange companies to discuss solutions to this problem.
Exchange Companies to Blame
Exchange companies were blamed for offering reduced prices for older notes. The exchange companies sell older/smaller denominations of dollar bills at 3-5% higher price on the grounds that they have to export these notes to Dubai and exchange them there again. They also said that the banks do not accept these either.
This issue translates into millions of dollars loss for Pakistanis who hold US dollars in their possession.
At the meeting, representatives of banks denied this issue saying that they accept these notes. The money exchange agents however argued otherwise.
People with foreign exchange accounts have complained that the banks give them old currency notes (US dollars) but do not accept them in return.
Zafar Paracha, Secretary General of the Exchange Companies Association of Pakistan said,
The State Bank has asked all banks to accept all kinds of US dollar notes and the SBP will accept them from banks.
SBP said that the banks would have to face penalties if they do not accept older dollar notes or notes of smaller values like $10.
The Other Side of the Argument
Bank representatives did not pull any punches either and pointed out that the State Bank of Pakistan accepts US dollar notes of $100 or $50 at least and not any lower. To that, SBP replied that they will hold another meeting soon to discuss this issue.
Syed Irfan Ali Shah, Executive Director of SBP said that the bank has provided new US Dollar bills to all the banks in Pakistan at a subsidized rate. SBP also paid for all the import costs and insurance of these notes.
People Face Hardships
Malik Bostan, president of the Forex Association of Pakistan said,
This is true that exchange companies are charging 3% extra on old-designed notes, but they have to pay the same amount in Dubai for exchanging these dollars,
He added that the people have been facing problems because of this as some exchange companies were charging up to 8% more on older US dollar notes.