Banks and other authorized dealers were given permission to settle their outstanding export loans themselves valuing up to $50,000 in the interbank market by the State Bank of Pakistan on Wednesday. As per current foreign exchange regulations, banks and other authorized dealers are permitted to use foreign currency deposits for providing foreign currency trade-loan facility to exporters and importers.
Under current foreign exchange regulations, banks and authorized dealers are permitted to use foreign currency deposits for providing foreign currency trade loan facility to importers and exporters. These loans are only allowed to be adjusted or settled against remittances from abroad or through the realization of export proceeds. These loans tend to remain unsettled in case where there is a lack of realization of export proceeds or situations which lead to cancellation of export contracts after partial performance.
The SBP’s permission will be needed in order to settle outstanding loans that cross the upper limit and according to the regulations the authorized dealers are required to retain the foreign exchange liabilities on their balance sheets.
