SBP modernises foreign exchange regulations to facilitate startups, fintechs and exports

The State Bank of Pakistan (SBP) has notified revisions in chapter 20 of the Foreign Exchange Manual to facilitate startups, fintechs and exports.

“The new policy for equity investment abroad will attract foreign direct investment through the establishment of holding companies by Pakistani fintechs and startups; support exports by facilitating exporters to establish subsidiaries or branch offices outside Pakistan; and allow resident Pakistanis to acquire sweat equity,” a statement issued by the central bank read.

“Further, changes in the foreign exchange regulations will facilitate portfolio investment in the country including mutual funds, Exchange Traded Funds (ETF) and Real Estate Investment Trust (REIT) Funds through Pak rupee-based Roshan Digital Account (RDA) and Special Convertible Rupee Account (SCRA).”

SBP, after approval of the federal government, has introduced three new categories of investment abroad under its revised policy governing equity investment abroad, and banks have been authorized to allow remittances under newly introduced categories.

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The categories are for ‘establishment of holding company abroad by residents for raising capital from abroad’; ‘establishment of subsidiary/branch office abroad by export-oriented companies/firms to promote exports’; and ‘investment abroad by resident individuals’.

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