Exchange firms unable to start biometric verification

The exchange companies conveyed to the State Bank of Pakistan (SBP) that the compulsory biometric verification of dollar buyers cannot be started on Friday (today) due to non-availability of software and requisite permissions from the relevant authorities.

Moreover, the National Database and Registration Authority (Nadra) sought up to six weeks time for implementation of biometric system at the exchange companies by fulfilling all the technical requirements.

"We have written a request letter to the State Bank for extending the deadline since the technical solution for biometric is necessary before the application of this restriction," said Malik Bostan, Chairman Exchange Companies Association of Pakistan (ECAP). He said that all members of the ECAP have been informed not to sell more than $499 until the State Bank allows them to continue with previous practice of selling dollars on Computerised National Identity Cards.

Through a notification on Oct 7, the SBP made biometric verification mandatory for buying $500 or above from the open market. The decision was taken to stop dollar outflow to Afghanistan following sharp increase in demand which destabilised the exchange rate in the open market amid media reports that millions of dollars were being smuggled out to Kabul particularly after the change of regime.

The SBP had directed the exchange companies to conduct biometric verification for all foreign currency sale transactions equivalent to $500 and above and outward remittances. This requirement will be applicable with effect from Oct 22, said the Oct 7 notification.

Mr Bostan said Nadra requires four to six weeks to make the biometric system possible while the exchange companies also need necessary software to start the verification process. The exchange companies earlier said that outflow of dollars to Afghanistan was very high while the Fitch Rating company also cited this issue as one of the reasons for destabilisation of exchange rate.

According to the measures taken by the State Bank, each person travelling to Afghanistan will be allowed to carry maximum $1,000 per visit with the annual limit of $6,000.

The State Bank last month revised Prudential Regulations for Consumer Financing and said the targeted steps would help in moderating demand growth in the economy, leading to slower import growth and thus supporting the balance-of-payments.

Despite several restrictions to reduce the outflow of dollars, the current account deficit rose to $3.4bn in the first quarter of FY22 while the dollar continued its upward drive against the rupee each day.