The State Bank of Pakistan (SBP) has raised the minimum paid-up capital requirement for exchange houses to Rs 1 billion, significantly tightening regulations to formalize the currency market.
Dawn said the updated regulatory framework poses challenges for older companies while making it more difficult to establish new ones.
In September 2023, the State Bank of Pakistan initially increased the minimum paid-up capital requirement from Rs200 million to Rs500 million to reduce the number of exchange houses.
The latest move doubles this requirement to 1 billion rupees, giving capital-strapped companies staggered deadlines: 600 million rupees by December 31, 2025, 800 million rupees by December 31, 2026, and 1 billion rupees by December 31, 2027.
The new framework requires companies to maintain this minimum capital on an ongoing basis. In addition, 15% of the paid-up capital must be maintained as regulatory reserve in cash or government securities approved with the State Bank of Pakistan.
Exchange houses are also prohibited from withdrawing money as loans or credits without prior approval from the State Bank of Pakistan. The same restriction applies to obtaining financing for business activities, with the exception of leasing vehicles necessary for operations. Shareholders are prohibited from divesting any part of their capital without the approval of the Bank of Sharjah Pakistan.