Published: 08:13 PM, 30 November 2025
State Bank of Pakistan’s Dollar Controls: Reform or Restriction?
The State Bank of Pakistan (SBP) has recently introduced sweeping changes to the way foreign currency transactions are conducted in the country, aiming to promote a cashless economy and tighten control over the outflow of dollars. While the move is framed as a step toward modernization and financial discipline, it has sparked significant debate among exchange companies, currency experts, and ordinary citizens who fear that the new rules may create more friction than relief.
In its latest circular, the SBP directed that all foreign currency sale transactions to resident citizens of Pakistan, specifically for deposits into foreign currency (FCY) accounts, must now be executed through account‑to‑account transfers. This means that individuals purchasing dollars for deposit will no longer receive cash; instead, the amount will be transferred directly into their FCY accounts. For those without such accounts, the option to buy cash dollars has effectively been eliminated.
The central bank’s rationale is clear: by curbing cash transactions, it hopes to control the outflow of dollars, discourage hoarding, and prevent money changers from holding large sums of foreign currency in bank accounts. In theory, this measure should channel foreign currency directly into the banking system, strengthening oversight and reducing speculative activity.
Under the new rules, when an individual buys dollars from an exchange company for deposit into an FCY account, the company will issue a cheque for the amount. This cheque must then be deposited into the buyer’s FCY account at a bank. If the account is held at the same bank as the exchange company, the transfer will be immediate. However, if the account is in a different bank, clearance could take at least five days.
For other currencies such as euros or pounds, the delays are even longer. Currency experts warn that interbank transfers for these currencies could take 20 to 25 days if processed through different banks, creating significant inconvenience for buyers who need timely access to funds.
The SBP has also tightened rules for individual buyers. No one can purchase more than USD 500 without providing a stated purpose, biometric verification, and supporting documents. Travelers, students, and individuals going for Haj or Umrah must now furnish complete documentation to buy amounts exceeding this threshold. Exchange companies emphasize that even small transactions are subject to scrutiny: “Now, an exchange company cannot sell even $500 cash to any individual without stating the purpose,” one representative explained.
This heightened documentation requirement is intended to curb misuse and ensure transparency. Yet for ordinary citizens, especially those unfamiliar with banking procedures or lacking access to formal accounts, the process may prove cumbersome.
Independent exchange companies argue that the circular disproportionately benefits bank‑owned exchange outlets. Since SBP has been encouraging banks to open their own exchange branches, the new rules will likely divert customers toward these institutions. Restrictions on holding cash dollars in bank accounts further weaken independent money changers, limiting their ability to compete with bank‑affiliated companies.
Operationally, exchange companies must now update systems, verify customer accounts, and manage transfers through cheques, adding administrative burdens. Many fear that these adjustments will slow down transactions and frustrate customers, eroding trust in the sector.
For ordinary Pakistanis, the transition to cashless dollar transactions presents several challenges:
# Longer Processing Times: Transactions that once took minutes may now stretch into days or even weeks. For euros and pounds, clearance could take up to 25 days, leaving buyers in limbo.
# Documentation Burden: Even small purchases require biometric verification and supporting documents, creating hurdles for travelers, students, and pilgrims.
# Exclusion of the Unbanked: Those without FCY accounts are effectively barred from buying cash dollars, marginalizing individuals who rely on cash or lack access to formal banking.
# Friction in Daily Needs: People who depend on quick access to foreign currency for travel, medical expenses, or emergencies may face delays that undermine the very purpose of their purchase.
Currency experts caution that while the regulation is designed for account holders, it inadvertently penalizes those who rely on cash. “People without bank accounts or who rely on cash will face friction to deposit FX. Though this regulation is for account holders, it will now be through cross cheque,” one expert noted.
The SBP’s decision reflects a broader effort to stabilize Pakistan’s fragile economy by tightening control over foreign currency flows. In a country grappling with dollar shortages, rising imports, and external debt pressures, such measures are seen as necessary to prevent capital flight and speculative hoarding.
Yet the policy also underscores the tension between financial discipline and public convenience. While it may strengthen oversight and encourage formal banking, it risks alienating ordinary citizens and independent exchange companies who find themselves constrained by delays, documentation, and limited access.
The SBP’s move to limit cash dollar transactions is emblematic of Pakistan’s struggle to balance economic control with public accessibility. By channeling foreign currency through account‑to‑account transfers, the central bank hopes to curb misuse and stabilize reserves. However, the unintended consequences, longer processing times, exclusion of the unbanked, and reduced competition, highlight the challenges of implementing reforms in a society where cash remains a lifeline for many.
For Pakistanis, the new rules may bring more challenges than relief in the short term. Unless accompanied by measures to streamline processes, expand access to FCY accounts, and protect independent exchange companies, the policy risks creating bottlenecks that undermine its intended benefits. In the end, the success of this initiative will depend not only on its ability to control dollar flows but also on its capacity to serve the needs of the people it affects most.
>> Source: Ceylon Wire News
