SBP allows advance payments for imports

The State Bank of Pakistan (SBP) has relaxed the trade regime by allowing advance payments or remittances for import of goods, which may increase outflow of dollars from the country. The State Bank issued a circular on this subject and invited all banks to circulate this new development regarding the advance payments without prior approval of SBP. “Authorised dealers are henceforth allowed to effect import advance payment with appropriate due diligence, without prior approval of SBP, against irrevocable letters of credit or invoices, up to 100 per cent of the value of letter of credit or invoice, as the case may be,” said the circular. A banker said the circular provides an opportunity to importers for paying advance remittances against their goods without opening of a letter of credit. This payment could be up to 100 per cent, which means an importer could pay 20 or 30 per cent more against goods.