KARACHI (September 14 2007): The State Bank of Pakistan (SBP) on Thursday allowed advance payments against letters of credit (L/Cs) and firm registered contracts up to 100 percent of the FOB or CFR value of the imported goods to further liberalise foreign exchange regime and to facilitate the importers.
The SBP said that advance payments against the letters of credit would be subject to some terms and conditions, including the all-possible measures, to verify the bona fides and genuineness of the transaction. To secure advance payment, the bank may also ask the importer to obtain performance guarantee from the supplier's bank.
The bank will obtain an undertaking from the importer that in case the goods are not received for any reason within four months, the bank as well as the customer will ensure repatriation of the advance payment back, central bank said.
In case the importer is unable to import goods against advance payment and underlying contract is cancelled, the bank will impose and recover a penalty at the rate of 0.25 percent per month or part thereof on the amount of advance payment from the date of remittance till date of repatriation of advance payment. The bank will deposit the penalty amount with the State Bank of Pakistan.
A monthly-consolidated statement of all such cases will be submitted by the head office of each bank to the Director, Exchange Policy Department, State Bank of Pakistan, Karachi.
If it is observed where actual imports do not take place against advance payments, the authorised dealers may debar the concerned importer from making any future advance payment under intimation to the Exchange Policy Department, State Bank of Pakistan.