NRO beneficiaries transferring big sums abroad

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By Shahid Iqbal
Sunday, 14 Feb, 2010

Interior Minister Rehman Malik recently warned some exchange companies of action if they did not stop their “illegal currency business”. -File Photo
KARACHI: The country has been rapidly losing foreign exchange through both legal and illegal channels as some big NRO beneficiaries are busy sending their money abroad, according to sources in banks and exchange companies.

They said the outflow through illegal channels had frustrated the government and the ministry of interior had time and again warned against illegal business and transactions being carried out by exchange companies.

The Federal Investigation Agency on Wednesday held a meeting with representatives of exchange companies and the State Bank to discuss the situation. The Forex Association of Pakistan’s president Malik Bostan, who attended the meeting, said that illegal business of foreign currencies in the country had been discussed. “At least 10,000 illegal money changers are doing business across the country and they are main sources for dollar smuggling,” he said.

“The interior ministry has assured us that it will launch a crackdown against them.”

Interior Minister Rehman Malik recently warned some exchange companies of action if they did not stop their “illegal currency business”.

The sources said that a number of illegal currency shops were involved in the smuggling of dollars to Afghanistan. Although the issue had been discussed at the highest level, no action was taken, they added.

Banking sources said the influential NRO beneficiaries were using both legal and illegal channels to send their assets abroad.

Under the law, a person can take up to $10,000 abroad. An amount more than that is considered illegal or smuggling. However, the State Bank said there was no limit on sending dollars abroad through banks.

“Everybody has the right to send dollars abroad through banks which maintain complete information about the sender, receiver and the purpose of sending dollars abroad,” said Syed Wasimuddin, chief spokesman for the State Bank.

However, some bankers said that a Pakistani foreign currency account holder could transfer unlimited dollars to his own account in any other country. They said that every big fish had opened several accounts in foreign banks and they could not be stopped from sending their illegal wealth abroad.

The country has increased its foreign reserves by borrowing of $11.3 billion from the International Monetary Fund and their return will begin within two years.

Malik Bostan said the State Bank had assured exchange companies that they would be supplied adequate dollars to bring down the artificially-heated dollar market. “Exchange companies have received $15 million over the past three days which eased the pressure for dollar buying,” he added.

The dollar lost 60 to 70 paisa on Saturday against the rupee in the open market as it was traded at Rs86.10.

The exchange companies also complained that banks were charging higher amount against the supply of dollars. The State Bank assured them that the issue would be taken up seriously.


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