Banks refuse to pay in foreign currency

| Inform account holders about freezing of accounts on SBP's directives | State Bank denies order

2018-06-28T01:05:12+05:00 Atif Khan

ISLAMABAD - Commercial banks have refused to pay foreign currency account holders in international currency while State Bank of Pakistan insists that government has not frozen foreign currency accounts.

The account holders who receive their salaries from foreign companies have been denied payments in international currencies.

"I went to bank to get money from my dollars account but the bank refused to pay me and said I can only get my payments in local currency at interbank rates," said Zulfiqar Ahmed an account holder of a commercial bank.

The interbank rates of foreign currency are lower than open market rates.

It was learnt that banks have told all foreign currency account holders who have been doing business with foreign companies and getting their payments in foreign currency, that they would be paid in rupees and not in dollars or other currency. The banks have told consumers that their accounts have been frozen on directives of the SBP.

When contacted to have information about the details of the SBP's directives, the State Bank's spokesman Dr Abid Qamar denied any directive to freeze foreign currency account.

However, the commercial bank officials insisted that they cannot implement any regulations without approval of State Bank of Pakistan and insisted that there are orders of the State Bank issued in recent past and after Financial Action task Force (FATF) move to blacklist the country the order has been implemented in latter and spirit.

They also told account holders to furnish a letter from their foreign employers or business partners to continue their foreign currency accounts, however they will be paid in local currency at interbank rates.

In 2016, after a dip of US dollar in open market, the then finance minister Ishaq Dar, reportedly suggested former prime minister Nawaz Sharif to freeze all foreign currency accounts in Pakistan but the insiders insist the move has been approved by outgoing Abbasi's government.

The foreign currency accounts were first seized in 1998 after Pakistan conducted nuclear tests.

The accounts were frozen by then ruling PMLN government, to secure the country from a sovereign default, owing to the looming economic sanctions by international powers who were opposed to nuclear tests.

It was also aimed to stop foreign currency flight to other countries but it not only bought bad name for the country but also resulted in severe financial penalties.

A number of foreign businesses including banks shut their businesses in Pakistan and the overall trust of business community was shaken irreparably.

 

 

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