SBP Withdraws Lien Policy on Delayed Export Proceeds to Facilitate Exporters

In a significant move to support exporters, the State Bank of Pakistan (SBP) announced the withdrawal of its earlier directives that imposed a lien on delayed export proceeds. The decision, which comes as a relief to the export community, particularly rice exporters, reverses the measures introduced through FE Circular No. 02 dated March 31, 2023. Under the now-withdrawn policy, exporters who failed to realize their export proceeds within the prescribed timeframe faced liens of up to 3 percent for delays up to 30 days, 6 percent for delays between 31 and 60 days, and 9 percent for delays exceeding 60 days. These measures were initially implemented to ensure the timely inflow of export earnings. The SBP had previously allowed exporters to bring delayed proceeds into Pakistan by April 30, 2023, without deductions. However, after this deadline, the lien policy was enforced, requiring Authorized Dealers (ADs) to report such cases to the Foreign Exchange Operations Department (FEOD) and deposit fines from the lien amount as determined by the Foreign Exchange Adjudication Department. With the latest decision, the SBP has instructed ADs to immediately release all amounts previously held under lien in accordance with the withdrawn circular. Moving forward, ADs are required to submit fortnightly reports of overdue export bills through Appendix-V20 and Appendix-V21 to the FEOD of SBP-BSC. Additionally, Para 33(ii)(a) of Chapter 12 of the Foreign Exchange Manual has been amended to reflect these changes. The decision to withdraw the lien policy follows a meeting between the SBP Governor, Jameel Ahmed, and a high-profile delegation from the Rice Exporters Association of Pakistan (REAP). The delegation, led by Senior Vice Chairman Jawed Jillani, included former REAP chairman Rafique Suleman, Mahesh Kumar, Hasab Raud (Convener, REAP Committee on State Bank Matters), Shahid Memon, Mohaib Moulvi, Faisal Garib, and Syed Badaruddin Chishti. During the meeting, held at the SBP headquarters, the REAP delegation highlighted the challenges faced by rice exporters, including delays in realizing export proceeds due to extended transit times beyond their control. Jillani urged the SBP to waive penalties imposed on exporters for such delays. Responding to their concerns, Governor Jameel Ahmed issued immediate instructions to remove the penalties, emphasizing the central bank’s commitment to facilitating exporters. Jillani also extended an invitation to the Governor to visit the REAP House in Karachi and meet with the REAP Managing Committee and leading rice exporters. The REAP delegation also raised other pressing issues, including the higher foreign exchange rates charged by shipping companies—reportedly Rs. 10 to 12 above the interbank rates. The Governor asked the REAP team to submit a formal complaint with documentary evidence for further action. Faisal Garib, a REAP member, raised concerns about the unavailability of the Export Refinance Facility (ERF) from certain banks. In response, the Governor assured the delegation that banks have sufficient ERF limits and encouraged them to report any refusals by banks to issue ERF to rice exporters. The delegation also sought the SBP’s assistance in repatriating long-pending funds stuck in Lebanon. Governor Ahmed assured them that efforts were already underway to resolve the issue.