SBP Launches Foreign Currency Value Account

In order to make it easier for foreign-incorporated businesses with non-resident Pakistanis holding the bulk of the stock, the State Bank of Pakistan (SBP) has decided to launch a new type of foreign currency account called the Foreign Currency Business Value Account (FCBVA).

These legal structures might include corporations, associations, foundations, limited liability partnerships (LLPs), societies, trusts, waqfs, and/or other corresponding ones. Sole proprietorships and unregistered partnerships are excluded from this, nevertheless.

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In accordance with a circular released by the SBP, Authorized Dealers (ADs) may open FCBVA of legal companies that are formed or registered overseas and that are majority (51 percent or more) owned and/or managed by non-resident Pakistanis and/or non-resident Pakistan Origin Card holders.

In practice, ADs or banks may permit FCBVA activities through electronic channels in addition to traditional ones. If necessary, ADs can also provide checkbooks to approved account operators.

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Additionally, ads would need to offer online real-time convertibility between foreign currencies and Pakistani Rupees (PKR) based on the request made electronically by the authorized account operator for the qualifying debits from the account. The ADs must provide the currency rate that will apply to the transaction in order to maintain transparency.

Ads would also need to develop a system to reactivate the account digitally in the event that FCBVA becomes inactive due to non-operation. They would also be responsible for keeping an eye on FCBVAs to reduce the possibility of money laundering and/or terrorism financing.

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