Illegal forex trade being curbed: SBP

KARACHI: Pakistan’s central bank has taken steps to regulate the foreign exchange market, and actions against illegal money changers, its governor said on Wednesday.

The State Bank of Pakistan (SBP) has revoked the licences of some exchange companies that were involved in unlawful activities and increased the minimum capital requirement for foreign exchange firms from Rs200 million to Rs500 million, governor Jameel Ahmad told reporters on the sidelines of a digital banking event.

Ahmad said the SBP had no power to take action against unlicensed forex firms, which were the target of a recent crackdown by law enforcement agencies.

“The SBP regulated exchange companies in accordance with its regulations and under the new reforms it has taken action against businesses that engage in illegal activities by revoking these firms’ licenses,” the governor said. “The law enforcement agencies have cracked down on unlicensed money changers.”

He said the SBP had also ordered large banks to set up their own exchange companies, which would help ease the liquidity crunch in the currency market.

“There will only be one kind of exchange company that will be allowed to operate,” the governor said. “You can see consolidations and mergers, and new, significant exchange businesses are on the horizon.”

The SBP has also given 30 days to forex companies in the “B” category to upgrade to the “A” category or merge with other firms. “Smaller exchange businesses will not be allowed to operate,” he said.

The governor also said the central bank was studying how other countries had launched digital currencies, but added that it was proceeding with caution and taking necessary security measures.