Bank of Punjab (BOP) Ventures into Exchange Company Business with Rs2.50 Billion Authorized Capital
The Bank of Punjab (BOP) is set to join the ranks of prominent banks in Pakistan by establishing its own wholly-owned exchange company, equipped with an authorized capital of Rs2.50 billion. This significant move was announced through a stock filing at the Pakistan Stock Exchange (PSX).
During their meeting on October 28, 2023, the BOP board approved the establishment of the exchange company, citing the current market potential, future expansion prospects, and recent structural reforms introduced by the State Bank of Pakistan (SBP) in the exchange companies sector as compelling reasons for this strategic decision.
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However, it’s important to note that the establishment of this exchange company is contingent upon receiving approval from the State Bank of Pakistan (SBP) and ensuring full compliance with all relevant laws and regulations.
This initiative by BOP aligns with the broader campaign led by the SBP to combat illicit activities within the underground market. The SBP has recently introduced structural reforms aimed at enhancing regulatory oversight, strengthening governance frameworks, fortifying internal controls, and tightening compliance protocols within the exchange company sector.
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As part of these reforms, the SBP has raised the minimum capital requirement for exchange companies from Rs 200 million to Rs 500 million. Additionally, it has specified that the capital must be free from any encumbrance resulting from prior losses.
It’s worth noting that several 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, have previously announced their intentions to establish their own forex companies.
The SBP has granted a no-objection certificate (NOC) to Allied Bank Limited (ABL) and MCB Bank Limited (MCB) for the establishment of their exchange companies, which will be known as ABL Exchange Company (Private) Limited and MCB Exchange Company (Private) Limited, respectively.
It’s noteworthy that Habib Bank Limited (HBL) and the National Bank of Pakistan (NBP) had ventured into exchange companies before the implementation of these new SBP regulatory measures, further underscoring the evolving landscape of financial services in Pakistan.
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