By Muhammad Soban

ISLAMABAD, Aug 16 (INP-WealthPK): To facilitate overseas Pakistanis, the State Bank of Pakistan (SBP) has now enabled business entities abroad with a majority of shareholding held by non-resident Pakistanis to open business value accounts in local banks to spend and invest in the country, according to a circular issued by the central bank.

Introducing two separate categories of foreign currency and Pak rupee accounts, namely Foreign Currency Business Value Account (FCBVA) and Non-Resident Rupee Business Value Account (NRBVA), the SBP has allowed and facilitated business entities incorporating abroad with a majority shareholding of non-resident Pakistanis to avail the facility.

Authorized dealers would be able to open the accounts of foreign entities having 51% or more shareholding held by non-resident Pakistanis (NRPs). Authorized dealers can now open and operate business value accounts in both foreign currencies and the Pakistani rupee in domestic banks. They are allowed by the SBP to invest and disinvest from permissible securities, provided that the relevant laws/regulations permit such investment. These entities could be companies, associations, foundations, limited liability partnerships (LLPS), societies, trusts, waqfs, and /or other similar legal arrangements. However, according to the circular, sole proprietorships or unregistered partnerships will use these services.

While talking to WealthPK, Dr. Arshad Mahmood Malik, Professor of Economics at Arid University Rawalpindi, said that this facility would be beneficial for overseas Pakistani businesses to be able to do business with domestic banks.

The State Bank is taking these steps for more dollar inflows in the country as it has attracted huge foreign currency inflows through Roshan Digital Accounts (RDA).

The SBP is making efforts to increase dollar flow in the country through different initiatives. The main objective of the SBP is to facilitate the NRPs businesses through domestic banks. Prior to this step, the SBP initiative of Roshan Digital Account (RDA), which gained much popularity among NRPs, deposited and invested $4.6 billion dollars through RDA in the 22 months till June 30, 2022. The RDA inflows have helped to maintain the country’s foreign exchange reserves at $8.6 billion.

Dr. Mehmood said Pakistan should focus on long-term measures and take initiatives to attract more Foreign Direct Investment (FDI), which is recorded at $1.8 billion, very low compared to other regional countries.

The FCBVA operations will be governed by regulations, and authorized dealers may allow operations through electronic channels besides conventional modes. Authorized account operators may also request checkbooks from dealers.

An authorized dealer is required to provide real-time online conversions from FCY to PKR based on the request made electronically by the authorized account operator for eligible debits from the account. The ADs will be required to provide exchange rate applicable to the transaction in order to ensure transparency.

Credit: Independent News Pakistan-WealthPk