SBP introduces Non-Resident Pakistani Rupee Value Accounts

KARACHI: In order to facilitate Non-Resident Pakistanis (NRPs) with opening and operating of non-resident Pakistani rupee accounts, the State Bank of Pakistan (SBP) has introduced NRP Rupee Value Account (NRVA). 

The NRVA will enable NRPs, through digital means to invest in the stock exchanges in Pakistan, residential and commercial real estate, Government of Pakistan (GoP) debt securities and term/remunerative deposit products of Authorized Dealers (ADs) on repatriable basis.

Other than NRPs, foreign nationals except those who have obtained work visa/permit to work in Pakistan, and firms or companies that are incorporated or registered outside Pakistan will be able to make use of the NRVAs.

Authorised dealers will be allowed to let NRPs to open joint accounts with other residents and non-residents as per banking practices and laws. However, these accounts will be treated as non-resident accounts.

As per regulations, the authorised dealers may also issue cheque books if required. Authorized dealers are also required to enable operations in the account through digital channels such as mobile banking, ATM or debit cards. Supplementary ATM or debit cards may also be issued as per banking practices.

However, if the debit cards are used internationally, the settlement will be the responsibility of the authorised dealer through the interbank. Moreover, in case of dormancy, authorised dealers are to devise a mechanism that allows the account holders to reactivate their account digitally.

Credits allowed in NRVAs include, remittance received from abroad through banking channels, transfer of funds from holders’ Foreign Currency Value Account (FCVA), from other NRVAs with the same authorised dealer and proceeds from disinvestment, sale or maturity of assets in Pakistan.

Account holders will be allowed to withdraw or make payments in Pakistani rupee to any person in Pakistan, however any amount paid will not be allowed to be credited back into the account.

In addition, remittances and payments outside Pakistan are to be limited to the extent of balance available in the account. The account holder will not need prior approval from the bank or the SBP, except in the case of investment in real estate.

As per the SBP, the minimum investment period in real estate will be three years. Following the completion of three years, investors will be able to repatriate the full amount of sale proceeds of the investment in property.

However, if an investor wishes to disinvest before three years, they can repatriate funds up to the lower of the amount of sale proceeds, or the principal investment amount in Pakistani rupee on the date of investment. The differential amount and profit or return earned, however, can be repatriated after the culmination of three years from the date of investment. The differential can also be invested in other eligible securities from NRVA.

Moreover, the SBP also announced a Foreign Currency Value Accounts (FCVA) which will enable NRPs that have assets abroad declared with the Federal Board of Revenue (FBR), to invest in foreign currency denominated government registered debt securities on repatriable basis.

Authorised dealers have to clearly indicate whether the account holder is a resident or non-resident and will have to provide a declaration of his or her assets held abroad. This declaration is to include the latest wealth tax statement filed with the FBR.

Authorised dealers are also expected to provide real time convertibility from foreign currency to Pakistani rupee based on the request made by the account holder digitally for the eligible debits from the account. Moreover, authorised dealers are also expected to indicate the exchange rate that is applicable for the transaction.

The account holders will be able to invest in permissible securities, transfer funds to account holder’s own NRP Rupee Value Account with the same authorised dealer, transfer to other foreign exchange Pakistani rupee account and non-resident rupee account with any bank in Pakistan.

Moreover, they will be allowed to remit and pay outside Pakistan to the extent of their balances available in the account without any prior approval from the bank or SBP. Cash withdrawals in foreign currency and equivalent local currency and payment in Pakistani rupee to any person resident in Pakistan are allowed. However, the amount is not to be credited back into the account.