The Bank of Punjab (BOP) has decided to join the ranks of other prominent banks in the country by establishing its wholly-owned exchange company with an authorized capital of Rs2.50 billion.
In a stock filing at the Pakistan Stock Exchange (PSX) on Monday, the Bank of Punjab said that its board, in their meeting held on October 28, 2023, has approved the establishment of an exchange company in the view of current market potential, future expansion, and recently introduced structural reforms by the State Bank of Pakistan (SBP) in the exchange companies sector.
However, establishing the exchange company is contingent upon approval from the State Bank of Pakistan (SBP) and full compliance with pertinent laws and regulations.
Read This: Big banks are all set to run the open market. What does it solve and what it doesn’t
BOP’s initiative is a crucial component of a wider campaign by the State Bank of Pakistan (SBP) aimed at curbing illicit activities within the underground market. The SBP has recently introduced structural reforms within the exchange company sector to enhance regulatory oversight, bolster governance frameworks, fortify internal controls, and tighten compliance protocols.
Furthermore, the SBP has raised the minimum capital requirement for exchange companies from Rs 200 million to Rs 500 million, with the additional stipulation that the capital must be unencumbered by prior losses.
Earlier, major banks including United Bank Limited (UBL), Meezan Bank, MCB Bank Limited (MCB), Bank AL Habib (BAHL), Allied Bank Limited (ABL), Faysal Bank Limited (FABL), Bank Alfalah (BAFL), Habib Metropolitan Bank and Askari Bank Limited announced to established their own forex companies.
The SBP has recently issued no-objection certificate (NOC) to ABL and MCB for establishing their exchange companies. Allied Bank’s exchange company will be named ABL Exchange Company (Private) Limited and MCB’s as MCB Exchange Company (Private) Limited.
Notably, Habib Bank Limited (HBL) and the National Bank of Pakistan (NPB) had ventured into exchange companies before the implementation of these new SBP regulatory measures.