Islamabad October 27, 2023, (PAKONOMY): Askari Bank Limited, a subsidiary of Fauji Foundation, has made a significant announcement on Friday as it unveils its plans to establish a wholly-owned Exchange Company (EC), following recent structural reforms introduced by the State Bank of Pakistan (SBP). This strategic move positions Askari Bank as the eighth banking entity in Pakistan to make such an announcement in response to the changing landscape of the foreign exchange market.
In a notice submitted to the Pakistan Stock Exchange (PSX), the Board of Directors of Askari Bank Limited (AKBL) has officially approved the creation of an Exchange Company with an authorized share capital of Rs1,000 million (Rs1 billion). However, it is important to note that the establishment of the EC is contingent upon receiving approval and clearance from the State Bank of Pakistan (SBP), the Securities & Exchange Commission of Pakistan (SECP), and the fulfillment of other essential regulatory compliance requirements.
This EC will function as a wholly-owned subsidiary of Askari Bank Limited, underscoring the bank’s commitment to expanding its services in the foreign exchange market and meeting the legitimate foreign exchange needs of the general public.
The backdrop to this development lies in the SBP’s recent introduction of ‘structural reforms’ in the Exchange Company sector. These reforms, aimed at enhancing control over the foreign exchange market, require leading banks actively engaged in foreign exchange business to establish wholly-owned Exchange Companies.
Askari Bank joins a growing list of banks that have embraced this reform, including Habib Metropolitan Bank, Bank Alfalah, Faysal Bank Limited (FABL), Bank Al Habib Limited (BAHL), MCB Bank Limited, Meezan Bank Limited, and United Bank Limited (UBL). These banks have similarly declared their intention to establish wholly-owned Exchange Companies.
The SBP’s reform measures also include a notable increase in the minimum capital requirement for Exchange Companies, which has been raised from Rs200 million to Rs500 million. This move is designed to raise the entry barrier for the private sector, making it more challenging for new players to enter the market.
Askari Bank’s decision to establish its wholly-owned Exchange Company underscores the bank’s commitment to adapt to the evolving financial landscape in Pakistanand to support the SBP’s efforts to enhance regulatory controls in the foreign exchange sector. This development reflects the bank’s ambition to continue serving the financial needs of its customers in an ever-changing market.