SBP doubles minimum capital requirement for exchange companies to Rs1 billion

The State Bank of Pakistan (SBP) has raised the minimum paid-up capital requirement for exchange companies to Rs1 billion, significantly tightening regulations to formalize the currency market. 

Dawn reported that the updated regulatory framework poses challenges for older companies while making it more difficult to establish new ones.

In September 2023, the SBP initially increased the minimum paid-up capital requirement from Rs200 million to Rs500 million to reduce the number of exchange companies. 

The latest move doubles this requirement to Rs1 billion, with capital-deficient companies given staggered deadlines: Rs600 million by December 31, 2025, Rs800 million by December 31, 2026, and Rs1 billion by December 31, 2027.

The new framework mandates companies to maintain this minimum capital on an ongoing basis. Additionally, 15% of the paid-up capital must be held as a regulatory reserve in cash or approved government securities with the SBP.

Exchange companies are also barred from withdrawing funds as loans or credits without prior SBP approval. The same restriction applies to obtaining financing for business activities, except for leasing vehicles required for operations. Shareholders are prohibited from divesting any part of their capital without SBP’s consent.