The State Bank of Pakistan (SBP) has created a complete framework for the creation and administration of freelancers’ bank accounts in an effort to support the independent contractor sector and streamline financial processes for them. This circular notification, which the central bank sent on a Monday to the CEOs and Presidents of all banks, makes major changes to how independent contractors can manage their financial affairs.
Exporters’ Special Foreign Currency Account (ESFCA)
One of the key provisions under this framework is the creation of an Exporters’ Special Foreign Currency Account (ESFCA), as defined in the Foreign Exchange Manual. This account allows freelancers to retain their export proceeds concurrently with their primary PKR account. What’s noteworthy is that this can be done either in person or remotely through digital means.
Enhanced Retention Limits for IT Exporters
Under the new framework, the State Bank of Pakistan has revised the permissible retention limit for IT exporters. Previously set at 35% of their export proceeds, this limit has now been increased to 50% for ESFCAs. This significant change provides freelancers with greater flexibility in managing their foreign currency earnings.
Simplified Account Opening Process
The State Bank of Pakistan is aware of the need to make creating an account for independent contractors simpler. In order to achieve this, they’ve devised a new framework that lessens the documentation needs, making it simpler for independent contractors to obtain bank accounts. Freelancers now have the option of opening their accounts physically or digitally.
Flexible Retention Limits
The fact that freelancers can keep 50% of their export revenues or a minimum of USD 5,000 per month, whichever is higher, is one of the most noteworthy features of this new structure. With the ability to make payments without obtaining SBP or bank clearance, this flexibility gives independent contractors more authority to handle their funds effectively.
Facilitation by Banks
To further streamline the process, the banks have been advised to facilitate the onboarding of prospective freelancers under the framework. This will ensure that freelancers can take full advantage of the new provisions without unnecessary hurdles.
The Way Forward
The recent declaration from the State Bank of Pakistan is a game-changer for the freelance community, to sum up. Freelancers’ financial capacities will be greatly improved by the implementation of the Exporters’ Special Foreign Currency Account (ESFCA) and the raised retention limits for IT exporters. Additionally, this is a win-win situation for independent contractors due to the streamlined account opening procedure and flexibility in keeping export revenues.
This move reflects SBP’s commitment to nurturing and promoting the freelance sector in Pakistan, recognizing its vital contribution to the national economy.
1: Who is eligible to open an Exporters’ Special Foreign Currency Account (ESFCA)?
Under the new framework, freelancers are eligible to open an ESFCA for the retention of export proceeds.
2: What is the maximum retention limit for IT exporters under the revised framework?
IT exporters can now retain up to 50% of their export proceeds in their ESFCAs.
3: Can freelancers open their bank accounts digitally?
Yes, freelancers have the option to open their bank accounts either digitally or physically, as per their preference.
4: What documentation requirements have been reduced for account opening?
The new framework has minimized the documentation requirements for freelancers, making it easier for them to open bank accounts.
5: Do freelancers need approval from SBP or banks to make payments from their ESFCAs?
No, freelancers can make payments from their ESFCAs without the need for approval from SBP or banks.