Following concerns raised by P@SHA (Pakistan Software House Association) regarding the mandatory retention of 35% of export proceeds by banks nationwide, the SBP has issued clarification to banks. The SBP has authorized banks to credit up to 35% of the export proceeds at the discretion of exporters, and to help IT exporters open foreign currency accounts.
Banks are authorized by State Bank to ensure timely credit of remittances in PKR accounts of the exporters until the special foreign currency accounts are opened or the exporter declines to avail the facility of foreign currency retention. SBP had also issued the direction to the bank to facilitate IT & ITeS exporters in swiftly opening of foreign currency accounts to retain up to 35% of export proceeds.
As part of the ongoing discussions with the Prime Minister Office and relevant government authorities, State Bank was tasked to ensure strict implementation of the 35% forex exchange retention of the export proceeds and to allow hassle-free outward payments through the specialized dollar account. To ensure the 35% forex retention is implemented smoothly, the SBP issued circular letters No. 02 and No. 03 of 2023 on January 13, 2023, regarding exports of software and information technology and the utilization of funds in exporters’ special foreign currency accounts. However, due to misinterpretation of the circular, exporters have faced difficulties in PKR conversion and retention.
At the request of the Governor of SBP, commercial banks have been directed to ease the foreign currency retention and utilization, with up to 35% being at the discretion of the IT exporters.
“P@SHA acknowledges the support and assurance offered by the State Bank. For the IT exports to thrive, we need change in mind set and ease of doing business. The swift facilitation by SBP and the commitment to resolve challenges in implementation of the circular would help build the confidence of the IT industry to expand business generation ” commented Muhammad Zohaib Khan, Chairman P@SHA.
P@SHA looks forward to the commercial banks to fully implement the circular in letter and spirt, thereby creating ease for the industry. The Governor SBP, in a meeting with P@SHA and PSEB/ MOITT on 30th January, 2023, had assured that cases reported at facilitation.itexporters@sbp.org.pk/ policy@pasha.org.pk will be addressed immediately.
Circular issued by State Bank:
- Exports of Software, Information Technology (IT) and IT Enabled Services (ITeS), January 13, 2023
- Clarification issued by State Bank to commercial banks, January 27, 2023
For queries reach out to:policy@pasha.org.pk