On 15 November 2025, the National Bank of Pakistan (SBP) sent a notice to exchange firms (ECs). This circular updated the rules for selling foreign currency (FCY).
The move is part of a bigger plan by the central bank. It aims to promote a “cashless economy.” It also seeks to improve the tracking of foreign currency flows and check FX liquidity more closely.
Analysts see this as a way to reduce undocumented dollar outflows, curb speculation, and boost macroeconomic stability. This is especially important given the ongoing pressures on Pakistan’s foreign exchange reserves.
Key Elements of the New Rules
Mandatory Account-to-Account Transfers for FCY Deposits
Resident Pakistanis must now sell foreign currency by transferring it directly to their FCY bank accounts. Physical cash transactions are not allowed.
This means that when someone buys dollars (or another foreign currency) from an exchange company, they won’t receive cash for their foreign currency bank account. Instead, the amount will be directly transferred to their FCY account.
Cash sales are capped at £500 without verification.
Individuals can now only withdraw US$500 in cash per transaction. They need to state a purpose, complete biometric verification, and provide supporting documents.
For amounts over $500, the buyer must justify the sale. People buying dollars for travel, education, or Hajj/Umrah must provide complete documentation for these transactions.
Restrictions for those without FCY accounts.
If someone lacks a foreign currency (FCY) account, they cannot buy cash dollars from exchange companies for depositing into an FCY account. The cash route is now closed off.
To get foreign currency through SBP-approved channels, you first need a foreign currency account.
Cheque-based options for some transactions.
- If someone buys FCY to deposit in their FCY account, the exchange company may give a check rather than cash.
- When that cheque is deposited in the FCY account:
- If it’s with the same bank as the exchange company, the transfer is easy and quick.
- If it’s in a different bank, the clearing takes at least five days.
- Benefit to Bank-Owned Exchange Companies
According to some exchange companies, the rule change favours bank-owned exchange houses. Since cash sales are restricted, independent money changers may struggle to compete. This could lead to more customers preferring bank exchange outlets.
Pushing flows through bank accounts improves traceability. This helps the SBP with its anti-money laundering (AML) efforts.
Reasons Behind the Move: SBP’s Motivations
Promoting a cashless economy
SBP explicitly states that the goal is to reduce reliance on cash. Shifting FCY sales to digital channels like bank transfers and cheques fits with global trends to formalise financial systems.
Improving Transparency and AML Controls
Account-to-account transfers help you see where funds come from and where they go. They also improve tracking and auditing. They track foreign currency flows, spot shady transactions, and enhance anti-money laundering.
Limiting cash dollar sales lowers the chance of money moving from the formal system to informal cash channels. This helps the SBP to better check and limit unregulated capital flight.
Protecting the Rupee
SBP is working to stabilize demand and supply in the FX market. They control how and where dollars are exchanged. This could help keep the rupee’s value steady. It may reduce speculative dollar hoarding and large cash outflows.
Operational Risk Reduction
For exchange companies, reducing cash handling lowers risks. It helps to cut theft, errors in reconciliation, and operational costs.
Potential impacts and challenges
Impact on Ordinary People
People without FCY accounts may struggle to buy and hold cash dollars. The need to open a foreign currency (FCY) account becomes more critical.
Delay concerns: If customers receive cheques instead of cash, bank clearance times may vary. This difference might cause inconvenience.
**Documentation Burden:** It can be tough for casual users to create purpose documentation, verify biometrics, and provide extra paperwork for amounts over £500.
Effect on Exchange Companies
Independent money changers might see less business, especially for cash sales. Big cash transactions are moving into the banking system, and that is why this is happening.
Bank-owned exchange houses could gain from this. More transactions will go through their systems, which may grow their customer base.
Macro-Economic Effects
Better macro monitoring: Improved visibility lets SBP track foreign currency inflows more closely. This boosts its ability to make better policy decisions.
Stabilising FX reserves: If this works, keeping cash dollar outflow low could slow the drop in foreign reserves.
Risk of unintended consequences: If rules are too strict, some users may turn to informal or black-market FX channels. This could happen unless enforcement is strong.
Financial Inclusion
This policy supports people in the formal banking system, such as those with FCY accounts. Marginalised or cash-reliant segments may find the transition difficult.
Many people may need financial education. This will help them learn how to open FCY accounts, handle cheques, and navigate the new system.
Criticisms & Risks
Accessibility Risk: Not everyone wants an FCY account. This is especially true for those who usually rely on cash. The policy may exclude these people or force them into cumbersome procedures.
Liquidity risks for ECs: Exchange companies that depend on cash transactions might see less liquidity in their cash operations due to this change.
Operational delays: Cheque methods and interbank transfers can delay transactions. This may frustrate customers who are used to receiving cash instantly.
If formal channels are too strict, people may use informal FX markets. This includes options like hawala or unlicensed dealers. This shift could weaken the SBP’s goals.
Verification costs: Checking identity, purpose, and documents increases compliance costs for customers and exchange companies.
Broader Significance
This step shows SBP’s commitment to formalising foreign currency transactions. It also aims to cut down on cash-based dollar dealings.
This may be part of a long-term plan to update Pakistan’s foreign exchange system. It seeks to match global rules for clarity, financial honesty, and AML compliance.
The policy could help Pakistan manage its economy better. Tracking FX flows helps create better monetary and foreign exchange policies.
Conclusion
The SBP has decided to limit cash dollar transactions. This marks a big change in Pakistan’s foreign exchange rules. The SBP is pushing the FX market towards formal and traceable channels. They are making account-to-account transfers required for FCY sales intended for deposit. Cash sales are capped at $500 without verification. Also, those without FCY accounts cannot make cash dollar purchases.
The move offers many benefits. It boosts clarity, cuts down on wild capital outflows, and improves macroeconomic oversight. But it also brings challenges, especially for those who rely on cash or lack foreign currency accounts. How well the SBP and exchange companies follow these rules matters. How users adapt will also decide if this initiative meets its goals smoothly.