The State Bank of Pakistan (SBP) has initiated a series of structural reforms within the Exchange Companies' sector. These reforms are designed to enhance services for the public, introduce transparency, and foster competitiveness in the sector.

One of the key changes outlined in a recent statement involves raising the minimum capital requirement for exchange companies from Rs. 200 million to Rs. 500 million. This move is aimed at ensuring that exchange companies have the necessary financial strength to operate effectively.

As part of these reforms, prominent banks actively involved in foreign exchange business will be required to establish wholly-owned exchange companies. These entities will cater to the legitimate foreign exchange needs of the general public.

The reforms also entail consolidating various existing exchange companies and their franchisees into a single category of exchange companies. These companies will operate under a well-defined mandate.

The SBP has offered Exchange Companies of category ‘B’ (ECs-B) and franchisees of exchange companies several options for their transformation into mainstream exchange companies. ECs-B are encouraged to graduate to Exchange Companies by meeting all regulatory requirements within three months. Failure to do so may result in the cancellation of their license.

Franchisees of Exchange Companies have the option to either merge or sell their operations to the relevant franchiser company within three months, provided they meet all regulatory requirements.

Exchange Companies of category ‘B’ and exchange company franchisees are required to submit their conversion plans within one month and seek a No Objection Certificate (NOC) from the SBP.

The SBP spokesperson emphasized that these structural reforms are being implemented to improve services for the general public and enhance transparency and competitiveness within the Exchange Companies’ sector. Additionally, these reforms are expected to strengthen governance, internal controls, and compliance culture within the sector.