The State Bank of Pakistan has introduced a sweeping set of restrictions on cash dollar transactions, making account-to-account transfers mandatory for anyone purchasing foreign currency for deposit purposes. The new directive marks a significant shift in the country’s currency handling framework as the regulator continues to push for reduced cash dependency and greater traceability within financial transactions.
Issued through an official circular, the SBP’s revised instructions state that all foreign currency sales to resident individuals for the purpose of depositing funds into their foreign currency accounts must now be completed through banking channels. Exchange companies may no longer hand over cash dollars for these transactions. Instead, the purchased amount will be transferred directly into the buyer’s account, ensuring that such inflows are digitally recorded and fully traceable.
According to exchange companies, the measure specifically targets individuals who frequently purchase dollars for savings or deposits. Those seeking to convert rupees to dollars and deposit them in FCY accounts will now receive a cheque or an internal account transfer rather than physical currency. This change also means that individuals without foreign currency accounts will be unable to buy cash dollars for deposit-related purposes.
Industry representatives explained that the transfer duration will vary depending on whether the exchange company and the buyer share the same bank. If both sides operate within the same bank, the transfer will be instantaneous. However, if the buyer’s FCY account is held at a different institution, the cheque clearance process could take up to five days, adding friction to what was previously a quick transaction.
The SBP has also tightened documentation requirements for individuals purchasing foreign currency for travel, education, pilgrimage or other specific needs. Buyers are now required to declare the purpose of their purchase for any amount over 500 dollars and must undergo biometric verification as part of the compliance process. Exchange companies stated that selling even 500 dollars in cash now requires purpose declaration and proper supporting documents.
Those traveling for study, Hajj, Umrah or personal trips will need to present full documentation before purchasing higher amounts, aligning individual purchases with regulated and verifiable usage.
Currency experts added that the new framework will have wider implications for individuals dealing in euros or pounds, where clearance times may extend to as long as 20 to 25 days. This is because the issuance of these currencies through cheques requires additional time for interbank settlement, further slowing access to non-dollar currencies.
Independent money changers believe that the updated rules will give bank-owned exchange companies a competitive advantage. Banks have been expanding their own foreign exchange outlets, and the SBP’s circular is expected to direct more customers toward them due to easier internal transfers and reduced clearance delays.
Some money changers highlighted that the circular restricts them from holding cash dollars in bank accounts, forcing them to rely on the banking market rather than managing cash inventories independently. They argue that without permission to maintain dollar balances in banks, they cannot operate at the same efficiency level as bank-affiliated exchange outlets.
While the SBP’s latest move is part of a broader push toward strengthening digital financial flows, the shift introduces new operational challenges for both individuals and exchange companies. The full impact of these restrictions is expected to unfold over the coming weeks as buyers adapt to longer processing times and stricter verification procedures.
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