Banks Should Follow LC Opening Guidelines for Imports: SBP

The State Bank of Pakistan (SBP) has instructed banks to comply with the guidelines of its recently issued circular on import facilitation.

According to journalist Ali Khizar, the central bank has warned banks of punitive action in case of non-compliance.

SBP has strictly instructed (verbally) banks trading heads to comply (punitive action for non-compliance) to the guidelines of recently issued circular on import facilitation (LCs opening)

Expect no payments/LCs opening at all for non-exporting industries

— Ali khizar (@AliKhizar) January 11, 2023

The State Bank of Pakistan recently withdrew the prior approval needed for banks for initiating import transactions.

In a circular dated December 27, the central bank invited the attention of the banks to Circular letter No. 9 of May 20, 2022, and Circular letter No. 11 of July 5, 2022, wherein banks were required to seek prior permission from Foreign Exchange Operations Department SBP-BSC before initiating any import transaction pertaining to HS Code Chapter 84, 85 and certain items of Chapter 87.

According to the circular, the central bank has decided to withdraw the above instructions with effect from January 2, 2023.

However, the banks may prioritize/facilitate the imports, as under:

• Essential imports: Imports related to essential sectors such as food (wheat, edible oil, etc.), and pharmaceutical (raw material, life-saving/ essential medicines, surgical instruments including stents, etc.)
• Energy imports: Imports related to petroleum group (oil and gas) and coal (for power projects based upon merit order of Ministry of Energy).
• Imports by Export-oriented Industry: Imports, especially of raw materials, input goods and spare parts, by the export-oriented industries.
• Imports for Agriculture inputs: Import of items required as input for agriculture (seed, fertilizers and pesticides).
• Deferred payment / self-funded Imports
• Import for export-oriented projects near completion