Advantage of foreign currency account

Hi,

What is the advantage of having a foreign currency account? I mean when we can receive foreign currency checks and wire in our normal rupee account what is the real advantage of FCA? One I can think of is I can pay in US$ through cheque.

I am thinking of opening one but want to know real benefit of it.

Two main advantages are:

1) You get to keep your foreign currency without the need to convert into rupees. With the increase in FX rates, you will get more rupees when you really need the money.

2) If you ever want to send money out of Pakistan through bank, FX Account is a must.

And a disadvantage is, that the government can freeze foreign currency accounts at will. You also don't want your money stuck...

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And a disadvantage is, that the government can freeze foreign currency accounts at will. You also don’t want your money stuck…
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Yeah…thanks to Mr. Sartaj Aziz!

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If you ever want to send money out of Pakistan through bank, FX Account is a must.
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Can’t we use other services like Western Union or some money exchange for that…they charge a nominal fee of about Rs. 500…the money exchangers…and give you cheque/draft which you can send.

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Think about paying an internet company via Bank Transfer - very few accept Western Union. Though, in the era of Debit Cards that can be used online, it doesn’t matter much.

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Shouldn’t 99% of the time credit or debit card will suffice!? I mean how many users pay through bank transfer for online purchase?

Online payment can also be done through credit card issued by any bank in Pakistan. it just needs a telephone call before transaction. i have seen such transactions using Alfalah, citybank cards.

Biggest advantage is that your money is saved from rupee depreciation. This is a major advantage. In 2008 the best return was obtained by those who kept their money in dollars because in that year the rupee depreciated by 27%.

The other advantage is that you don't get taxed on the amount in FC account. AFAIK FC accounts are not subject on inspection by tax authorities.

Its also easier to send wire transfer abroad if you have an FC account.

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Shouldn't 99% of the time credit or debit card will suffice!? I mean how many users pay through bank transfer for online purchase?

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99% of users don't have credit cards because they are a hassle to get. 99% of Pakistan issued VISA debit cards DON'T work online.

I have had to pay using bank transfer in the past. It was the only option at the time. Now I have a ubl wiz card that works online so I don't have to do this anymore.

The disadvantage of FC account is that usually there is a fee for cash deposit. The bank calls this cash handling fee. Something like 55 paisa per dollar.

There is also the fact that you can't receive TT from foreign companies into your FC account. You can receive TT from individuals but not from companies. This is because of SBP rule forbidding you from depositing export returns in FC account.

Also FC accounts have large min balance requirement. At least $500 in some banks. So that is Rs. 40,000 that is blocked for the duration of the account.

Oh yes one other disadvantage is that you get less interest or profit (depending on unislamic or islamic bank) on FC account compared to rupee account.

Good points rokra. Just a couple of question to clear some things:

When you say you can't receive TT from foreign companies into FCA, does it mean no wire transfer or it is TT only and it is different from wire transfer!?

Do banks in Pakistan provide facility to FCA account holders to send wire transfer online or you have to go to the branch for that. In fact I don't even know if any bank in the world provide online wire facility so just clearing up!?

By the way you can open FCA in Bank Islami for USD 100. This is the min. balance you need to maintain.

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Good points rokra. Just a couple of question to clear some things:

When you say you can’t receive TT from foreign companies into FCA, does it mean no wire transfer or it is TT only and it is different from wire transfer!?

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TT stands for Telegraphic Transfer and is the same as bank to bank wire transfer. Saying TT is like saying “film” instead of “movie” i.e its a word from days gone by but still used today.

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Do banks in Pakistan provide facility to FCA account holders to send wire transfer online or you have to go to the branch for that. In fact I don’t even know if any bank in the world provide online wire facility so just clearing up!?

By the way you can open FCA in Bank Islami for USD 100. This is the min. balance you need to maintain.

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Well that is good news about the min balance. I didn’t know that :).

My bank faysal bank does not provide online banking at all. Don’t know about other banks locally.

Internationally I know JP Morgan Chase provides this facility. I am sure other banks in rich countries do too.

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Good points rokra. Just a couple of question to clear some things:

When you say you can’t receive TT from foreign companies into FCA, does it mean no wire transfer or it is TT only and it is different from wire transfer!?

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One other point. For some reason my bank does not mind if I deposit FC cheques into my FC account even if the sender is a company. But when it comes to wire transfer they object.

@rokra

When you say they object you mean they ask for extra documentation like filling a form or they simply refuse.

It's strange because yesterday I got wire from a company in usa into my mcb rupee account.

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@rokra

When you say they object you mean they ask for extra documentation like filling a form or they simply refuse.

It’s strange because yesterday I got wire from a company in usa into my mcb rupee account.

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This topic is about Foreign Currency (FC) accounts not rupee accounts. Anyway I’ll repeat what I wrote before.

According to state bank of pakistan regulations you cannot credit export earnings into FC accounts. You must credit them into rupee accounts:

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(ii) Opening of foreign currency account covered by sub-para (i) is subject to the condition that these are not fed with:

d) any payment received for services rendered in or from Pakistan;

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http://www.sbp.org.pk/fca/index.htm

Now the way things work with my bank is that if I get a USD check I can deposit that into my FC account even if that check is from a company.

But its different with wire transfers. So if I receive a wire it has to go to a rupee account. I can’t get the money in my FC account.

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Now the way things work with my bank is that if I get a USD check I can deposit that into my FC account even if that check is from a company.

But its different with wire transfers. So if I receive a wire it has to go to a rupee account. I can’t get the money in my FC account.

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Hmm…note to self…one more reason not to go for FCA.

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Hmm…note to self…one more reason not to go for FCA.

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Yes, well, again it only applies to wire transfers sent from company bank accounts. If an individual sends you a wire transfer you can credit that to an FC account as it falls under the category of foreign remittances.

Guys what is TT n wire transfer??:s

i have recently opened an FC account at askari bank. The reason is that u could get the wire transfer without any problem. A number of friends regularly receive 20000 to 30000 dollars without any objection from the bank. i have opened an account because of the same reason . i m expecting to get some wire transfer ,lets see how much of this is true.

ROFL.... :D its so funny

.... :P :P :P

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i have recently opened an FC account at askari bank. The reason is that u could get the wire transfer without any problem. A number of friends regularly receive 20000 to 30000 dollars without any objection from the bank. i have opened an account because of the same reason . i m expecting to get some wire transfer ,lets see how much of this is true.
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HUH!?