The State Bank of Pakistan (SBP), on Tuesday, eased regulations for the realization of export proceeds.
Pursuant to its EPD Circular No. 02 of 2022 addressed to authorized foreign exchange dealers, the central bank clarified that amendments introduced through the circular dated 5 January 2022 will not be applicable on exports where irrevocable letters of credit with a usance period of up to 180 days were issued or established up to the date of issuance.
Besides the proposed relaxation, the SBP noted in all such cases, authorized dealers (ADs) shall not allow any change beyond 180 days in shipment date/expiry of LC/enhancement in LC or shipment against expired LCs or any other terms and conditions relating to tenure of the LC after the issuance of the above circular.
Moreover, the State Bank opined that “where the terms of sale/ irrevocable letter of credit provide for payment on 120 days’ usance from the date of shipment, it shall be permissible for the exporter to repatriate the export proceeds within 135 days from the shipment date.”
The revised sub-para (i) of para 6 has been changed to:
Full export value of goods exported from Pakistan and declared to the Customs authorities should be received in an approved manner, as embodied in State Bank of Pakistan’s (SBP) Notification No. F.E. 1/2022-SB dated the January 5, 2022 on the due date for payment or within one hundred and twenty (120) days from the date of shipment, whichever is earlier, or within such period as may be prescribed by SBP through specific or general instruction, through an Authorized Dealer either in convertible foreign currency in which the Authorized Dealer maintains accounts or in Pakistan rupee from a repatriable rupee account of a nonresident. In case of shipment on DP/CAD/ sight basis the payment should be received within 45 days from date of shipment. However, where the terms of sale/irrevocable letter of credit provide for payment on 120 days’ usance from the date of shipment, it shall be permissible for the exporter to repatriate the export proceeds within 135 days from shipment date. Prior approval of the Exchange Policy Department, SBP should be obtained before arranging for payment in any manner other than that mentioned above.
Besides the above, the central bank stated that other instructions on the subject shall remain unchanged. It also advised authorized dealers to bring the above amendments to the notice “of all their constituents for meticulous compliance.”