KARACHI: The State Bank on Thurs­day reduced the Statutory Liquidity Reserve (SLR) requirement for excha­nge companies to 15 per cent from 25pc providing excess liquidity to these firms in a bid to see more remittances via formal channels.

The exchange companies have been demanding for the last few years to reduce the SLR, maintaining that they did not have enough capital to buy dollars and other currencies.

The SBP said that the reduced 15pc SLR requirement will enhance liquidity with exchange companies and enable them to further channelise home remittances and foreign exchange.

“For the last five years, we have been demanding a reduction in the SLR and finally it has happened. I believe it will help us bring more remittances for the country,” said Malik Bostan, the chairman of the Exchange Companies Association of Pakistan (ECAP).

The SBP said that during the year ended June 2020, exchange companies, through their tie-up arrangements abroad, have channelised home remittances of $1.44 billion, while this figure stands at $1.67bn for ten months of current fiscal year.

“The remittances of $1.67bn does not show the amount of foreign exchange which we companies surrender in banks on a daily basis. For the last 10 months, the total deposits (including remittances) by the exchange companies into banks are about $3.8bn,” said Mr Bostan.

“This regulatory intervention of State Bank would provide increased liquidity to exchange companies to enable them to play their role in increasing the remittances flow and the public will be further facilitated in timely and conveniently receiving home remittances from more than 1,200 outlets across Pakistan,” the SBP circular said.

In a statement, ECAP Secretary General Zafar Sultan Paracha, thanked the SBP for slashing the SLR. He expressed hope that the lower SLR will help to stabilise the business of exchange companies while more remittance would come through the companies.

Published in Dawn, May 21st, 2021