Pakistan’s central bank introduces new measures to facilitate freelancers and IT exporters

The State Bank of Pakistan (SBP) has introduced a number of new measures to facilitate IT exporters and freelancers in the country and boost digital economy.

In the first significant change, the SBP has increased the permissible retention limit of IT exporters from 35% to 50% of their export proceeds in the Exporters’ Specialized Foreign Currency Accounts (ESFCAs). This means that IT exporters can now retain more of their earnings in foreign currency, which can be used to meet their business needs, such as paying for foreign software and equipment.

The SBP has also simplified the usage of balances available in ESFCAs. IT exporters can now make payments from their ESFCAs without any approval from the SBP or banks. This will make it easier for IT exporters to do business and reduce their administrative burden.

Framework for Freelancers

In addition, the SBP has introduced a new Framework for Freelancers. This framework aims to ease the opening of bank accounts for freelancers and allow them to retain more of their earnings in foreign currency accounts. Freelancers can now open bank accounts both digitally and physically, with minimum documentation requirements. Additionally, their ESFCAs will be opened concurrently with the opening of their primary PKR account.

Freelancers can retain 50% of their export proceeds or USD 5,000 per month, whichever is higher, in their ESFCAs. They can also make all payments from these accounts without any approval from the SBP or banks.

How will it benefit freelancers and IT exporters?

  • IT exporters can now retain 50% of their export proceeds in foreign currency accounts, up from 35%.
  • Freelancers can also retain 50% of their export proceeds in foreign currency accounts, or USD 5,000 per month, whichever is higher.
  • IT exporters and freelancers can open foreign currency accounts both digitally and physically, with minimum documentation requirements.
  • Freelancers can also make all payments from their foreign currency accounts without any approval from the SBP or banks

These new measures are aimed at boosting IT exports and supporting freelancers in Pakistan. The SBP has advised banks to facilitate the issuance of debit cards to IT exporters and freelancers, so they can make online payments from their foreign currency accounts.

The new measures are also a positive step towards promoting financial inclusion and supporting the growth of the digital economy in Pakistan.

Framework for Freelancers Account

Here are the key details cited byState Bank of Pakistan for the freelancer account.

Features Description
Eligible Customers Freelancers, individuals resident in Pakistan, engaged in provision of digital/online services, including IT and IT related services against which payments are received from outside Pakistan
Mode of Onboarding
    In-person or remotely through digital means
Information required at the time of Account Opening
  • CNIC/ NICOP/ POC number
  • Date of issuance of CNIC/ NICOP/ POC
  • Full Name (as per identity document)
  • Father/ spouse name
  • Date of birth
  • Place of birth
  • Mother’s maiden name
  • Phone (mobile number)
  • Email
  • Postal address
  • In case of minor, account will be opened with guardian, and above information about the guardian will also be obtained in addition to minor’s information
Declarations/Consents required
  • Undertaking that the source of funds is freelance activities
  • Undertaking to confirm beneficial ownership of funds/ controlling rights and other information provided during the opening of account
  • Foreign Account Tax Compliance Act (FATCA)/ Common Reporting Standard (CRS) Declaration if required
  • acceptance of Terms and Conditions (T&Cs) of the account and consent to use the information/ documents provided for due diligence and supervisory functions
Documents required at the time of account opening
  • Scanned/ copy of original ID card (CNIC/ NICOP/ POC) or record of NADRA verification
  • Live photo of the customer (only in case of digital onboarding)
  • Signature (Wet/ Digital/ Electronic) or any other authentication method recommended by the bank
Verification, Risk Profiling and other features
  • Bank will carry out the required due diligence which includes biometric verification of customer including liveness check through NADRA (in-App or in branch), screening of the prospective customer against applicable sanctions’ regimes, to ensure that services are not provided to proscribed/ designated individuals
  • The bank shall ensure data/privacy protection, safety and security of information/ documents through reliable IT security measures.
  • After completing requirements, 2 accounts (Exporters’ Special Foreign Currency Account-ESFCA as defined in FE Manual and a primary PKR account) will be opened simultaneously.
  • Account may be opened with zero balance. Moreover, there shall be no maximum balance limit in the accounts.
  • Maximum turn-around time (TAT) for decision to open and activate or decline is 2 working days from the time the required documents/ information have been submitted/ uploaded and verification completed.
  • In case of decline, reasons should be recorded and communicated to the applicant in writing, preferably through digital means.
  • Cash withdrawal shall only be done in PKR. Foreign currency cash withdrawal will not be allowed in Pakistan.
  • In case of digital onboarding, following additional verification is required:
    • Confirming that the applicant is a human by deploying mechanisms such as CAPTCHA
    • Verification of contact details through One Time Password on phone or email or callback
    • In cases where biometric verification is not possible, verification of any two particulars of customer from the information received through NADRA Verisys (such as mother’s maiden name, place of birth etc, which are not available on identity document) may be conducted
Monitoring and Due Diligence
    After opening of account, as a part of ongoing monitoring and customer due diligence, banks may seek additional information from customers based on their ongoing internal risk assessment and compliance framework and carry out periodical re-profiling of the customers in accordance with their risk management framework including turnover in the account

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