Banks likely to accept container detention, demurrage charges

KARACHI: The State Bank of Pakistan (SBP) has issued draft amendment to Foreign Exchange Manual under which banks may be allowed to accept container detention charges and demurrage charges in order to facilitate trade in payments.

The SBP issued the draft amendments and invite stakeholders’ comments before finalizing the foreign exchange manual.

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According to the draft amendments made to 14 chapter:

4A –Remittances of Container Detention Charges by Foreign Shipping Companies

1. Authorized Dealers may accept container detention charges (CDC) directly from the customers of shipping companies/ agents (having valid shipping/agency license as stated under Para 1 (iv) ibid and valid agency agreement) in a separate PKR account opened for this purpose only. No other deposits whatsoever shall be made in such accounts by ADs.
2. Authorized Dealers may allow monthly remittance of CDC (net of disbursements, refunds, and income tax paid/payable) of up to USD 50,000/- on Form-M to foreign principals of those foreign shipping companies/agents which are collected in the above mentioned accounts on submission of application along with the following documents: –
3. Applicable Tariff Rate Sheet;
4. Summary of Detention Charges along with copy of invoices
5. F.P Shipment & Breakdown of Disbursement
6. Copiesy of Tax payment Rreceipt, agency agreement, valid customs shipping agent license.
7. Auditors’ certificate from QCR rated audit firm confirming payment of income tax, genuineness of transactions and no duplication of payments (only for remittance beyond foreign exchange equivalent to PKR 1 Million or equivalent/-)
8. Any CDC invoice involving detention charges above 100 days will require valid justification along with documentary evidence.
9. An undertaking to repatriate back to Pakistan, the amount found by the State Bank, on post-facto checking, to have been remitted in excess of the entitlement.
10. In case of Transit Trade, PRC evidencing receipt of equivalent PKR from the final destination country.

Applications for monthly remittances beyond USD 50,000/- shall be forwarded to FEOD as per prescribed format along with relevant documents for approval.

4B – Remittances of Demurrage Charges

Authorized Dealers may allow monthly remittance of demurrage charges (net of allowed lay time and other deductions-if any, and income tax paid/payable) upto USD 50,0000 on Form-M to the Owner/Operator/Commercial Operator of vessels/ships/tankers on submission of application along with the following documents: –

1. Valid charter party agreement (if applicable),
2. Copy of the Invoice/ debit note
3. Lay time calculation time sheet verified from third party
4. Port statement of fact
5. Copy of B/L, GD, Bill of Entry.
6. Proceeds Realization Certificate (PRC) for port disbursement charges
7. F.P Shipment & Breakdown of Disbursement
8. An undertaking to repatriate back to Pakistan, the amount found by the State Bank, on post-facto checking, to have been remitted in excess of the entitlement.

Applications for remittances beyond USD 50,000/- shall be forwarded to FEOD as per prescribed format along with relevant documents for approval.

4C – Remittances of Surplus Port Disbursement Funds by Foreign Shipping Companies

Authorized Dealer may allow remittance of surplus amount of port disbursement funds held by local offices of shipping companies/ agents back to their principals on Form-M, subject to valid Agency agreement/authorization letter and shipping license, after the payment of port dues/charges and duly reported on the F.P. Statement upon submission of application along with the following documents: –

1. Customs & Port Charges Clearance with invoices
2. Proceed Realization Certificate in Original
3. Copy of Swift Message
4. Copy of Schedule J/O-3
5. F.P Shipment & Breakdown of Disbursement

4D – Disbursement of Cash to Master of Ship arriving at Pakistani Ports

Authorized Dealer may disburse cash to master of ship arriving in Pakistan out of remittance received by them from owner of the ship/ shipping lined abroad on submission of application along with the following documents: –

1. Copy of Passport of the Master of the Vessel
2. Copy of Crew List containing their names, passport numbers, country etc.
3. Proceed Realization Certificate in Original
4. Copy of Swift Message for amount realized

Authorized Dealers will retain all the documents mentioned in Para 4 and its subparagraphs along with Form ‘M’ submitted by foreign shipping companies/ agents. The original Form ‘M’ shall be submitted as usual through schedule E-4 while reporting the transaction in the monthly Foreign Exchange Returns

Any irregularity detected and advised by the State Bank shall be rectified by the concerned shipping company/agent within ninety days or the amount under objection will be repatriated or adjusted from subsequent remittance, as applicable.

Authorized Dealers shall also ensure proper due diligence of the above mentioned remittances from AML/CFT and foreign exchange risk perspective through Compliance or Risk Management Department including but not limited to particulars of remitter/ beneficiary and shall determine the ultimate beneficial ownership/ relationship between entities.