Generated from the document text · 19 Aug 2026
The State Bank of Pakistan issued this circular in 2023 to reduce mandatory forex retention requirements for IT and ITES exporters. The policy allows qualifying exporters to retain a higher portion of their foreign exchange earnings locally, providing improved working capital flexibility. This represents a continuation of SBP's efforts to support the IT services sector through enhanced forex management options. The circular applies specifically to registered IT and IT-enabled services exporters engaged in cross-border service delivery. Industry stakeholders, including P@SHA, have monitored this as a significant relief measure for the sector's forex management.
Key questions answered
What percentage of foreign exchange earnings can IT and ITES exporters now retain under this circular?
Based on the reduced retention requirements referenced in the circular, IT and ITES exporters can retain a higher portion of their export earnings in foreign currency accounts compared to previous mandates. However, the specific retention percentage should be confirmed from the complete SBP circular text, as the exact figure is not provided in the available excerpt.
How do these new retention rules differ from the previous forex retention framework?
The circular introduces reduced mandatory surrender requirements, meaning exporters must now sell a smaller portion of their forex earnings to the banking system. This gives companies greater autonomy over their foreign currency holdings for operational needs, import payments, and offshore investments. The previous thresholds and mandatory surrender percentages can be verified in the circular's comparative provisions.
What are the eligible uses for foreign exchange retained under this policy?
Retained forex can typically be utilized for business-related imports, offshore payments, maintaining foreign currency accounts, and meeting operational expenses in foreign currency. Companies should consult the specific clauses of the circular to confirm permitted uses and any conditions attached to retained earnings.
What reporting or compliance obligations apply to companies utilizing these retention provisions?
Exporters must continue to comply with SBP's reporting requirements, including foreign exchange utilization statements and export proceeds repatriation documentation. The circular may specify enhanced reporting obligations or reduced frequency for companies operating under the new retention framework. Companies should maintain records demonstrating that retained forex is utilized for permissible purposes only.
When did these reduced retention requirements become effective, and do they apply retroactively?
The circular's effective date and applicability terms should be verified from the original SBP document. Regulatory circulars typically specify their commencement date and whether they apply prospectively or if any transition period exists for existing export contracts and outstanding export proceeds.
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