Business

SBP modernises forex rules

New policy will help attract FDI through holding companies of fintechs, startups

Our Correspondent February 11, 2021

Nearly 87% of foreign loans were for budget financing and building foreign exchange reserves, which meant that these had not been utilised for creating assets. PHOTO: FILE

KARACHI:

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

“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, amongst other changes to the foreign exchange regulations,” the SBP said in a statement.

According to the central bank, further changes to the foreign exchange regulations will facilitate portfolio investment in the country including mutual funds, exchange-traded funds (ETFs) and Real Estate Investment Trust (REIT) Funds through the Pakistani rupeebased Roshan Digital Account (RDA) and Special Convertible Rupee Account (SCRA).

The 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 authorised to allow remittances under the newly introduced categories.

“Intending to attract investment in the country, the SBP has allowed trading of units of funds quoted at the stock exchange, including ETFs, REIT funds and closed-end mutual funds, through SCRA and Pakistani rupee version of Roshan Digital Account (NRP Rupee Value Account - NRVA),” the statement added.

Furthermore, these account holders have been allowed to invest in units of mutual funds registered as open-end schemes under the management of asset management companies (AMCs) licensed by the SECP to provide asset management services.

The central bank also allowed the private funds established and operated by the private fund management companies licensed by the SECP to provide private equity and venture capital fund management services, to issue units of their funds to the non-resident investors.