Under the existing legal provisions governing the grant of licenses to foreign
banks for operating in Pakistan. State Bank is
empowered to consider applications from only such countries where the government
or law provides the same facilities to the
banking companies incorporated in Pakistan as the Government or the law of Pakistan
provides to companies incorporated
outside Pakistan.
Further, the following criteria for granting permission to foreign banks to establish branches in Pakistan is in vogue:
1.The applicant bank should have been in active business for a minimum of
5 years.
2.The minimum assigned capital to be maintained by the applicant bank in Pakistan
should not be less than Rs. 5 million or
7.5% of its demand and time liabilities in Pakistan whichever is more. (This
requirement is subject to review from time to
time).
3.It should have branches in at least two countries other than the country of
its incorporation.
4.In the case of a country where more than one Pakistani bank is operating,
the number of banks from that country should
not exceed the number of Pakistani banks.
Following information/documents are also required for processing application of a foreign bank to open a branch in Pakistan:
1.Annual audited reports of the bank for the last 5 years.
2.Bio-data of directors of the bank.
3.List of shareholders of the bank indicating their nationality.
4.Attested copy of Certificate of Incorporation.
5.Attested copy of Articles and Memorandum of Association.
6.List of branches operating inside and outside the country of origin.
7.Letter of Authority from Central Bank authorizing the bank to establish branches
outside the country.
8.Rules regarding opening of foreign bankis branches in its country.
State Bank considers applications for grant of licenses to commence banking
business in Pakistan by banks incorporated
outside Pakistan which are duly submitted in the prescribed form.
The prevalent International Banking practices are followed. The Letters of
Credit received from abroad/opened from Pakistan
are by and large subject to uniform customs and practice for documentary credits
of the International Chambers of Commerce,
Paris. All the Commercial Banks authorized to deal in foreign exchange can open/advise
letters of credit and negotiate
documents drawn there against under the permission granted to them by the Central
Bank. The Inward/Outward remittances
are also handled by the Commercial Banks authorized to deal in Foreign Exchange.
The instruments/procedures internationally
in use in remittance are also used by the Banks in Pakistan, e.g. remittances
can be made to/from the country in the shape of
telegraphic transfer mail/transfer/demand drafts etc. In a large variety of
transactions, general permission has been given to the
Commercial Banks for opening letters of credit/making remittances to the parties
abroad. The cases falling outside the scope of
the general authority, declared to the Banks, required to be referred to the
Central Bank.