The State Bank of Pakistan has issued a significant revision to its regulatory framework governing the sale of foreign currencies, announcing that account-to-account transfers are now mandatory for all residents purchasing foreign currency for the purpose of depositing it into their foreign currency bank accounts. The directive, released through a circular to exchange companies, marks an important step in the central bank’s continued efforts to strengthen oversight, reduce cash-driven transactions, and improve transparency in Pakistan’s foreign exchange market.
In the circular, the SBP referenced the existing guidelines under Para 5, Chapter 7 of the Regulatory Framework for Exchange Companies and confirmed that these instructions have now been amended to reflect new requirements. According to the central bank, the move is aimed at promoting a cashless economy by shifting FCY deposit-related flows from physical currency handling to traceable electronic channels. The revised guideline states that all foreign currency sale transactions intended for deposit into an FCY account must now be executed solely through account-to-account transfer rather than through cash transactions.
Previously, exchange companies were permitted to sell foreign currency in cash even when a customer intended to deposit it into a foreign currency account, provided that the individual met identification verification requirements. Additional controls required biometric verification for transactions of USD 500 or more and mandatory bank-funded PKR payments for FCY purchases of USD 2,000 or higher. While these checks provided baseline safeguards, the system still involved heavy cash reliance, creating operational vulnerabilities and limited traceability in deposit flows.
Industry experts say the revised regulation will fundamentally change how FCY deposit-related transactions are conducted. Money changers will no longer issue physical cash for these purposes and will instead transfer the foreign currency directly to the customer’s designated FCY account. Analysts believe this shift will significantly improve monitoring of foreign currency movements, enhance AML and compliance controls, and reduce opportunities for misuse.
Corporate and investment banking professional Syed Ali Imran commented on the development, noting that fully shifting deposit-related FCY flows to banking rails strengthens traceability and enables clearer verification of both source and destination. He stated that cleaner reporting of foreign currency deposits supports improved macro-level monitoring, enabling policymakers to better evaluate FX trends and adjust regulatory measures accordingly. Imran added that lowering dependence on physical cash would also reduce operational risks for exchange companies, such as theft, human error, and reconciliation discrepancies.
The move, while beneficial for governance and oversight, may create short-term frictions for individuals who rely heavily on cash-based processes or do not maintain bank accounts. Although the regulation targets transactions intended for FCY account deposits, the transition will likely require greater awareness and adaptation among customers accustomed to traditional cash-based exchanges. Some industry observers also noted that the introduction of cross cheques for such transfers may require additional onboarding for those unfamiliar with account-based FX handling.
Despite potential early challenges, the regulation is widely viewed as a step toward strengthening financial inclusion and encouraging more residents to utilize formal banking channels. By making account-to-account transfers the standard mechanism for FCY deposits, the SBP continues to build a more controlled and transparent financial environment.
The central bank has directed all exchange companies to inform their teams of the updated rules and ensure full compliance with the revised instructions.
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