SBP Sets $30,000 Annual Limit on Credit and Debit Cards for Cross-Border Transactions  

The State Bank of Pakistan (SBP) has set an annual limit of $30,000 for cross-border transactions through debit/credit cards on an individual basis.

The central bank has tightened the restriction on the use of credit and debit cards after monitoring their misuse for cross-border transactions, which are based on a commercial basis instead of personal needs as far as the risk profile is concerned.

Various commercial banks introduced their premium credit cards along with incentives for their use in the past which continued to grow among the elite and business class for commercial purposes rather than for its mandatory utility during touring to foreign countries.

To ensure the judicious use of cards, including virtual cards, it has been decided to place an annual limit of $30,000 per individual on card-based cross-border transactions, the SBP circular stated.

For this circular, the year will start from November 1, however, the limit for the current year will be calculated from the date of issuance of this circular. This limit would be applicable to an individual across the banking industry, the circular added.

SBP asks banks for due diligence of customers

Commercial banks have been advised to conduct proper due diligence of the individual customers at the time of their onboarding/ update of risk profiles and duly incorporate their cross-border payment needs through cards in their profiles

They are advised to ensure that the issuance of multiple cards to a single customer is commensurate with their risk profile and is monitored collectively. Further, banks should only allow those card-based cross-border transactions, which are in sync with the personal needs of the customers and have no commercial purpose.

Although it is the primary responsibility of a customer to ensure that his/ her annual limit is not breached at any time, the banks shall institute a mechanism of ongoing monitoring whereby card-based cross-border payments by individuals through single/multiple cards are only allowed under the limit prescribed above and as per the risk profile of the customer.

The bank or fintech desirous to facilitate their business customers may issue corporate cards, to be used strictly under the applicable provisions of the Foreign Exchange Manual and the profile of the customer. These institutions shall institute a robust mechanism to monitor the payments through such corporate cards.

Besides, the banks are advised to run an awareness campaign to inform their customers about the contents of this circular and the fact that cross-border commercial payments through cards issued to individuals are not permissible

Banks are advised to ensure meticulous compliance with these instructions and bring the same to the notice of all their constituents. Any non-compliance with the above instructions may be dealt with under relevant provisions of the Foreign Exchange Regulation Act, 1947, and any pecuniary or administrative action, as deemed necessary, may be initiated against the delinquent ADs.



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