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Prize bond should also be in dollars.

In its more than one year of operations since December 19, 1991. Khanani & Kalia (KKI) has developed an enviable reputation for being one of the most innovative moneychangers in the country. The Khananis are most reliable people in money-changing transactions, stretching their base from Karachi to other parts of the country like Lahore, Faisalabad, Islamabad and Peshawar. At present they have four branches operating in Karachi alone, from which one can easily imagine the standard and quality of their work.

Under the State Bank permission. Khanani & Kalia is now able to purchase and sell foreign currency notes as well as travellers cheques at most competitive rates through their one-window facility. The Government's new policy has helped prevent illegal transactions of foreign currency and has paved the way for a stronger and more independent money market ensuring reliability and authenticity in currency dealings. The exchange rates at the money changing outlets are fixed daily as per International Free Market Mechanism.

The recent economic reforms, i.e. privatisation and deregulation of Government enterprises and functions are right steps towards common welfare, favourable effects of which have already started to surface. Deposits in Residents Foreign Currency Accounts have recently touched US $1.5 billion mark as a result of foreign exchange deregulation. While this is an encouraging beginning, more lucrative results are expected soon.

In the light of the company's experience in foreign exchange business, it is felt that much more can be done to further enhance the Government's stance on currency deregulation. Some suggestions in this regard are as follows:

1) Although the Foreign Bearer Certificate FEBC and the Dollar Bearer Certificate (DBC) schemes have been very successful, the Foreign Currency Bearer Certificate (FCBC) Scheme has unfortunately not been able to achieve its objectives mainly because such certificates are not encashable before two years. This bar, more psychological in nature, keeps the people from buying FCBC in desired quantity and should be relaxed.

2) The large denomination Dollar Bearer Certificates (DBC), such as those of Dollar 100,000 now in circulation are an unsafe entity because forgeries can easily be passed off as the real thing and create a lot of problems.

3) The Prize Bond scheme has always played a key role in improving the savings rate in Pakistan. It has also proved to be the most economical source of financing for the Government. Any such similar scheme in foreign currency will also prove equally beneficial to the economy.

4) Import and export business should be linked with the foreign exchange free market in such a way, as to evolve a Bonus Voucher Scheme that was in use in Pakistan in the sixties. This will in turn give rise to a full-fledged open foreign exchange market and enable us to compete with exporters across the border.

5) Since the Government has already taken a decision in principle to allow full rupee convertibility in the economy, it is understood that the restriction of US $ 1000 allowance in two years for Pakistani nationals travelling abroad will be relaxed shortly. The sooner this step is taken, the better for the Exchequer.

6) Security should be provided through police and law enforcement agencies to the money changers in order to let them do their business for the benefit of the public.

7) A consistent policy in foreign exchange regulations should be pursued by the Government to build an image in the eyes of foreign investors and overseas Pakistanis as confidence building would enhance the deposits by 5 times of what they are now in the banks.

8) This business needs attention from the Government and media, in terms of publicity. Free exchange rates should also be published by the print media.

Apart from operating in the local market, Khanani & Kalia is also serving the overseas Pakistanis. It has been able to persuade large numbers of them to utilise this channel for the transfer of their hardearned foreign exchange with profit. Besides that, Khanani & Kalia also plans to start its business in places like Dubai, Taskhent (Central Asia) and Singapore.
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Title Annotation:Pakistan's regulations on money-changing
Author:Kalia, Hanif S.
Publication:Economic Review
Date:Mar 1, 1993
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