ISLAMABAD: A parliamentary panel on Tuesday refused to approve amendments to the Foreign Exchange Regulations Act 1947 after an ill-prepared State Bank of Pakistan (SBP) failed to defend the proposed bill.
The National Assembly Standing Committee on Finance and Revenue questioned the SBP officials about the “half-heartedly prepared” bill despite appearing in front of parliament.
“Go back to the drawing board and apply your mind before bringing the bill to the National Assembly,” said a visibly perturbed chairman of the standing committee, Omar Ayub Khan. He said the SBP should also critically review the entire Act and bring a comprehensive piece of legislation instead of only proposing amendments for seeking more powers.
It was the second time in less than a month when the standing committee had to postpone voting on a bill proposed by the SBP.
Earlier, the committee delayed approval of the Credit Bureaus Act of 2015 and SBP Deputy Governor Saeed Ahmad tendered an apology for the unpreparedness of his team.
“The SBP was repeatedly bringing half-heartedly prepared drafts before the standing committee and there was a need to strengthen the legal department of the central bank,” said Pervaiz Malik.
The committee chairman clarified that the legislators did not have objections to the proposed amendments but what they wanted was a good piece of legislation that was carefully drafted keeping in mind all the requirements.
Introduced in parliament in 2005, the National Assembly Standing Committee on Finance approved the bill in 2007. However, the approval lapsed as the then parliament did not vote on the bill.
Syed Naveed Qamar of the Pakistan Peoples Party (PPP) also pointed to the discretionary powers the SBP was enjoying under the existing law and sought to set limits.
The central bank is seeking more enforcement powers to regulate the foreign exchange business of banks and exchange companies by amending the Foreign Exchange Regulations Act 1947.
It wants powers to impose penalties of up to Rs1 million if a bank or a foreign exchange company contravenes the Act. If the violation continues, the SBP wants to impose a penalty of Rs20,000 every day.
If the accused fails to pay the penalty, the SBP is asking for powers to recover the amount from the accounts and assets of the defaulters. The violations include procedural matters as well as those covered under the Anti-money Laundering Act, said an SBP official.
The standing committee chairman directed the SBP to bring synergy between the proposed bill and the Anti-money Laundering Act.
In the absence of powers, the SBP had to follow a lengthy procedure of adjudication, said Fazal Mehmood, Director Exchange Regulations Department of the central bank. He said the SBP could only suspend or cancel the licence of a bank or an exchange company after violation of rules, which often became more severe than the violation warranted.
The SBP’s purpose was not to collect money but the law would be used as a deterrent in order to effectively regulate the foreign exchange market, said SBP Deputy Governor Saeed Ahmad.
Published in The Express Tribune, March 18th, 2015.
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