The SBP has provided clarity to banks in response to queries from P@SHA (Pakistan Software House Association) regarding the nationwide requirement for banks to retain 35% of export earnings.
The SBP has granted banks permission to assist IT exporters in opening foreign currency accounts and to credit up to 35% of export revenues at the exporters’ discretion.
Until dedicated foreign currency accounts are formed or the exporter chooses not to use the facility of foreign currency retention, banks are permitted by the State Bank to ensure prompt credit of remittances in PKR accounts of the exporters.
SBP support for IT & ITeS industry
Additionally, SBP had given the bank instructions to help IT & ITeS exporters quickly open foreign currency accounts so they could keep up to 35% of export revenues.
The State Bank was tasked with ensuring strict implementation of the 35% forex exchange retention of the export proceeds and to enable trouble-free outward payments through the specialized dollar account as part of the ongoing discussions with the Prime Minister Office and relevant government authorities.
The SBP released circular letters No. 02 and No. 03 of 2023 on January 13, 2023, regarding exports of software and information technology and the utilization of funds in exporters’ special foreign currency accounts, to ensure the implementation of the 35% forex retention is carried out without incident.
However, exporters have encountered problems with PKR conversion and retention as a result of incorrect interpretation of the circular.
Commercial banks have been instructed to make it easier to retain and use foreign money, with IT exporters having the option to retain up to 35% at the Governor of SBP’s request.
“P@SHA acknowledges the support and assurance offered by the State Bank. For the IT exports to thrive, we need change in mind set and ease of doing business. The swift facilitation by SBP and the commitment to resolve challenges in implementation of the circular would help build the confidence of the IT industry to expand business generation” commented Muhammad Zohaib Khan, Chairman P@SHA.
P@SHA anticipates that the commercial banks would fully execute the circular in letter and spirit, easing the industry’s burden.
In a meeting with P@SHA, PSEB, and MOITT on January 30, 2023, Governor SBP promised that cases reported to email@example.comfirstname.lastname@example.org would be handled right away.
Circular issued by State Bank:
- Exports of Software, Information Technology (IT) and IT Enabled Services (ITeS), January 13, 2023
- Clarification issued by State Bank to commercial banks, January 27, 2023
To read our blog on “Chairman P@SHA said, SBP & FBR detached from PM’s IT vision,” click here.