Besides revoking licenses of exchange companies involved in illicit activities, the State Bank of Pakistan (SBP) will not allow small exchange companies to operate, said SBP Governor Jameel Ahmed in a media briefing on Wednesday.
The governor said the central bank has initiated a series of measures to regulate the currency market. As part of these measures, the SBP has mandated that only a specific type of exchange company will be permitted to conduct business operations. This change is intended to streamline the industry and curb unlawful activities that have plagued the sector.
To bolster the transparency of transactions within the industry, SBP has increased the minimum paid-up capital requirement from Rs. 200 million to Rs. 500 million. This move is expected to encourage larger and more established exchange companies to engage in transactions in a transparent and responsible manner.
Notably, large banks are establishing exchange companies with substantial capital backing, which is seen as a positive step towards resolving liquidity issues and ensuring the stability of the sector, the governor added.
Jameel said SBP is revoking licenses of exchange companies found to be engaging in illegal activities. However, he added that the regulator’s jurisdiction is limited to companies that have acquired licenses from it. Any action against entities operating without permits falls within the purview of the government.
The governor added that in a bid to facilitate the transition, exchange companies falling under the ‘B’ category have been granted a grace period of 30 days to convert into ‘A’ category companies. This move is aimed at encouraging compliance and adherence to the new regulations. ‘B’ category companies also have the option to merge with ‘A’ category entities, ensuring a smoother transition for smaller exchange companies.
The governor also mentioned that smaller exchange companies that do not meet the new capital requirements will no longer be allowed to operate in the sector. This is a clear signal of the SBP’s commitment to fostering a more transparent and responsible financial environment in Pakistan.