Bank Account Mandatory for Forex Transactions Above $2,000

The Federal Government’s current restrictions on forex buying are temporary, and the use of a bank account is only mandatory for cash sale transactions worth $2000 and above.

The Senate Standing Committee on Finance and Revenue was informed on Wednesday by the State Bank of Pakistan (SBP) Deputy Governor that the restriction of buying dollars through cheques is meant to document the economy and discourage the outflow of foreign currency.

The meeting, chaired by committee chairman Senator Saleem Mandviwalla, expressed reservations about the restriction with Mandviwalla saying that there should be no cheque or bank account requirement for purchasing dollars.

He said the restriction of the cheque is unreasonable when passports, CNICs, and air tickets are available. He expressed concerns that many people in Pakistan do not even have a bank account.

The SBP official told the committee that the restriction will also encourage people to open bank accounts.

State for Finance Aisha Ghaus Pasha told the committee that the restriction for foreign travelers to buy dollars only through cheques and the cash-carrying limit reduction will remain in force to strengthen the regulatory regime, improve documentation, and control the illegal activity of foreign currency.

Under the revised limits individuals with age 18 years and above (adults) can now take out of Pakistan foreign currency equivalent to $5,000 per visit, while those below the age of 18 years (minors) can carry out foreign currency equivalent to $2,500 per visit.

Further, the annual ceiling to take out foreign currency for adults and minors has been set at $30,000 and $15,000, respectively.

The state minister also highlighted that having a bank account is required only for purchases of more than $2,000. She further said that the restriction by the federal government is temporary and has been imposed because of the ongoing foreign currency crunch.

It is pertinent to mention here that last month, the central bank advised exchange companies that all foreign currency sale transactions of $2,000 or above (equivalent in other currencies) against the rupee should be conducted through official payment modes, such as bank transfer/cheques from the personal bank account of the customer.

At the time, the central bank said that this step aims at encouraging the general public to use various banking channels, which are generally more secure, to fulfill their genuine foreign exchange needs.