PRGMEA criticises banks’ inaction

LAHORE: The Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) has lauded the State Bank of Pakistan (SBP) for its directives aimed at easing the use of Exporters’ Special Foreign Currency Accounts (ESFCAs), but voiced frustration over the lack of compliance by commercial banks.

On February 23, 2024, the SBP issued guidelines permitting exporters to freely utilize funds in ESFCAs for international payments related to their business, without requiring prior approval from the central bank. The move, intended to facilitate exporters and streamline business operations, also allows for the issuance of debit cards linked to these accounts upon request.

Despite these measures, PRGMEA Central Chairman Mubashar Naseer Butt criticized the commercial banks on Monday for their failure to implement the directives, even after several days. Butt described the banks' inaction as a reflection of the SBP's weak administrative control over the banking sector.

"The central bank has further liberalised the utilization of the retained funds in order to facilitate the exporters and to promote ease of doing business, declaring that the all exporters would be able to freely utilize the funds held in ESFCAs for making all types of payments abroad of current account nature, for their own business purposes, without prior SBP approval. Furthermore, on request of exporters, Authorized Dealers may issue debit cards against the balances held in ESFCAs," Butt said.

"It's highly disturbing that a matter of a facilitation to the exporters have totally been ignored by the banks and no practical will for adhering to the directive is shown so far, which is also reflective of the weak administrative control of the central bank on the banking industry."

The PRGMEA said the apparel industry has the status of Pakistan’s top national industry, providing jobs to millions of workers directly or indirectly, earning billions of dollars precious foreign exchange for the national kitty, the apparel industry has shown great export potential over the periods and its one of the main contributors to LSM growth over the period.