The State Bank of Pakistan (SBP) has announced a significant regulatory relaxation for the banking sector by simplifying the process for remitting certain payments abroad, a move aimed at reducing operational delays and improving efficiency across regulated financial institutions.
Under the revised framework, banks are now allowed to remit salaries, professional fees and other related payments for overseas-based directors, chairpersons, Sharia advisors and scholars without obtaining prior approval from the central bank’s Foreign Exchange Department. The relaxation applies to authorized dealers operating under SBP regulations, provided all required documentation is complete and compliance checks are fulfilled.
Previously, such remittances required case-by-case approval from the SBP, a process that often resulted in delays even for routine and recurring payments. Banks were required to submit individual requests for clearance, adding to administrative burdens and slowing down financial obligations, particularly those involving foreign professionals and advisors.
With the new policy in place, authorized dealers have been given greater operational autonomy to process these transactions independently. Officials familiar with the matter said the move is designed to streamline compliance procedures while maintaining regulatory discipline, as banks will remain responsible for ensuring that each transaction fully complies with foreign exchange rules.
Despite the relaxation, the SBP has made it clear that oversight has not been diluted. Banks must continue to maintain accurate records, verify supporting documents and ensure that payments are made strictly in line with applicable regulations before executing any overseas transfer. Any lapse in compliance could still result in regulatory action.
Industry participants have welcomed the decision, noting that it addresses a long-standing operational challenge within Pakistan’s banking system. Delays in remitting legitimate payments to overseas directors and consultants had become a recurring issue, particularly for banks with international board members or foreign advisory arrangements.
The move is also expected to provide meaningful support to Pakistan’s Islamic banking sector. Payments to foreign-based Sharia advisors and scholars play a critical role in Islamic banking operations, as these experts are responsible for governance oversight, product approvals and ensuring compliance with Sharia principles. Delays in compensating such professionals had, at times, complicated governance processes and operational planning.
By allowing banks to process these payments directly, the SBP aims to facilitate smoother engagement with international Sharia experts and strengthen the overall governance framework of Islamic financial institutions operating in Pakistan.
The decision, announced from Islamabad, is part of the central bank’s broader push to modernize financial regulations and align them with evolving industry needs. Over the past few years, the SBP has been gradually shifting toward a more risk-based and facilitative regulatory approach, reducing unnecessary approvals while placing greater responsibility on regulated entities.
Analysts say the change reflects growing confidence in the internal control systems of banks and authorized dealers, as well as an effort to improve Pakistan’s ease of doing business in the financial sector. Faster and more predictable cross-border transactions are seen as essential for attracting foreign expertise and maintaining effective corporate governance.
The relaxation also comes at a time when the SBP is working to improve efficiency across the financial system amid broader economic reforms. By cutting down procedural bottlenecks, the central bank hopes to allow banks to focus more on core operations while still meeting regulatory and compliance standards.
Market observers believe the move could set the stage for further simplification of foreign exchange rules, particularly in areas involving routine and low-risk transactions. However, they caution that effective implementation will depend on banks maintaining strong compliance practices and transparent reporting.
Overall, the revised framework signals the SBP’s intent to balance regulatory oversight with operational flexibility. By easing remittance procedures for legitimate professional payments, the central bank has taken another step toward reducing administrative friction, supporting banking sector efficiency and modernizing Pakistan’s financial regulatory landscape.
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