RESTRICTED
WORLD TRADE S/FIN/W/12/Add.42
5December 1997
ORGANIZATION(97-5361)
Original: English Committee onTrade inFinancial Services
COMMUNICATION FROM PAKISTAN
Conditional Offer onFinancial Services
Addendum
Thefollowing communication iscirculated attherequest ofPakistan toMembers ofthe
Committee onTrade inFinancial Services.
_______________
TheGovernment ofPakistan hereby submits itsoffer onFinancial Services.
Theoffer isconditional upon satisfactory conclusion ofthenegotiations. Pakistan reserves
therighttomodify, reduce orwithdraw thisofferatanytimeprior toconclusion ofthenegotiations
andtomake anytechnical changes, correct omissions, errors andinaccuracies. Pakistan alsohereby
filesthefinallistofArticle II(MFN) Exemptions.S/FIN/W/12/Add.42
Page2PAKISTAN
SPECIFIC COMMITMENTS -CONDITIONAL OFFER ONFINANCIAL SERVICES
Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
FINANCIAL SERVICES
Pakistan undertakes theCommitments onFinancial Services interms oftheprovisions ofPartIIIoftheAgreement. These commitments arebased onthe
understanding outlined inArticle XIXoftheAgreement, andaresubject totheavailability ofsimilar commitments from large number ofcountries of
significance toPakistan. Forthese reasons, Pakistan does notconsider itself tobeprevented from adopting orenforcing non-discriminatory measures
aiming atprotecting thesoundness andintegrity ofbanking andinsurance industry.
A.Insurance andinsurance-
related services:
Insurance:
- Life
- Non-life(1)Unbound
(2)Unbound(1)Unbound
(2)Unbound
(3)- Bound fortheexisting foreign
insurance services providers asto
their scope ofoperations andequity
structure.
- Maximum of25percentofforeign
shareholding inexisting life
insurance companies.
- Foreign equity innewlifeinsurance
companies permitted upto51per
cent.(3)Unbound
(4)Unbound except asindicated under
horizontal measures.(4)Unbound except asindicated under
horizontal measures.
Reinsurance services
Reinsurance services and
retrocession
(CPC 81299)(1)Unbound
(2)None
(3)Unbound(1)Unbound
(2)None
(3)UnboundS/FIN/W/12/Add.42
Page3Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
(4)Unbound except asindicated under
horizontal measures.(4)Unbound except asindicated under
horizontal measures.
B.Financial services
(excluding insurance)Thecommitments inFinancial Services are
given tothenationals andfinancial institutions
oftheMembers whose laws andpolicies do
notbartheprovision ofsimilar commitments
tothePakistani nationals andfinancial
institutions.Provision ofallbanking andfinancial services
inPakistan aresubject totheinjunctions
regarding Islamic banking aspronounced by
thecompetent courts inPakistan.
I.Banking
(a)Acceptance ofdeposits
andother repayable funds
from thepublic in
Pakistan(1)Unbound
(2)Unbound
(3)(i) Bound forthevolume ofdeposits
andother repayable funds mobilised
byforeign banks inPakistan asat
thetime ofconclusion ofthe
Negotiations on12December 1997.(1)Unbound
(2)Unbound
(3)Theshares heldbyforeign nationals and
foreign financial institutions intheir
locally incorporated subsidiaries not
transferable without theprior written
approval oftheCentral Bank.
(ii) Foreign banks (other thanthose
already operating their branches in
Pakistan ason12December 1997)
permitted toaccept deposits and
other repayable funds from public by
setting uplocally incorporated
limited companies withforeign
equity ownership upto49%.
Licence toundertake commercial
banking business isrequired from
theCentral Bank.S/FIN/W/12/Add.42
Page4Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
TheLicence toforeign banks willbe
issued onthebasis ofsame
eligibility criteria asapplicable to
domestic commercial banks. The
minimum paidupcapital required to
undertake banking business by
foreign banks shall benotmore than
what isrequired bythedomestic
commercial banks,
i.e.US$11.5 million.
(iii) Bound forthenumber ofbranches
offoreign banks operating in
Pakistan asattheconclusion ofthe
negotiation on12December 1997.
Change inthecontrolling
share-holders oftheforeign banks
operating their branches inPakistan
mayrequire newlicence. Other
foreign banks willbeallowed upto
three branches attheplace oftheir
choice. ATM 'sinstalled atthe
branch premises nottreated asa
separate branch.
(iv) Prior permission inwriting ofthe
Central Bank isrequired byany
person forholding beneficial
ownership of5%ormore ofthe
paid-up capital ofanybank/financial
institution.
(v) Representation offoreign nationals
ontheBoard ofDirectors allowed in
proportion totheir share holding.
(4)Unbound (4)UnboundS/FIN/W/12/Add.42
Page5Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
(b)Lending ofalltypes
including consumer credit,
mortgage, factoring,
credit andfinancing of
commercial transaction(1)Unbound
(2)Unbound
(3)(i) Bound forthevolume offoreign
banks 'assets inPakistan atthetime
oftheconclusion oftheNegotiations
on12December 1997.(1)Unbound
(2)Unbound
(3)Lending bybanks tocompanies
controlled bynon-residents issubject to
theborrowing entitlements oftheforeign
companies asdetermined byforeign
exchange rules applicable from time to
time.
(ii) Investments inshares ofexisting
domestic banks permitted toforeign
nationals/foreign financial
institutions fortrading purposes.
Strategic investors canhowever be
permitted anequity investment upto
26% ofthetotal paidupcapital on
case-by-case basis under specific
Sale-Purchase Agreements tobe
approved bytheCentral Bank.
(4)Unbound except asindicated under
horizontal measures.(4)Employment offoreign nationals inbanks
andfinancial institutions operating in
Pakistan require prior clearance ofthe
Central Bank.S/FIN/W/12/Add.42
Page6Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
(c)Allpayment andmoney
transmission services
including traveller
cheques andbankers '
draft (butexcluding credit
charge anddebit cards)(1)Unbound
(2)Unbound
(3)Foreign banks branches operating in
Pakistan attheconclusion ofthe
negotiation on12December 1997 and
banks incorporated inPakistan permitted
toundertake allpayment andmoney
transmission services.
(4)Unbound except asindicated under
horizontal measures.(1)Unbound
(2)Unbound
(3)Unbound
(4)Unbound except asindicated under
horizontal measures.
(d)Guarantees and
commitments(1)Unbound
(2)Unbound
(3)Guarantees andcommitments inforeign
currency andthose undertaken infavour
oronbehalf ofnon-resident tobe
governed byforeign exchange laws.
(4)Unbound except asindicated under
horizontal measures.(1)Unbound
(2)Unbound
(3)Unbound
(4)Unbound except asindicated under
horizontal measures.S/FIN/W/12/Add.42
Page7Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
(e)Trading, forownaccount
onlyof:
- money market
instruments;
- foreign exchange;
- transferable
securities;
- other negotiable
instruments.(1)Unbound
(2)Unbound
(3)(i) Theissue, saleandpurchase of
foreign currency andtraveller
cheques isallowed tocommercial
banks licenced asAuthorized
Dealer.
(ii) Foreign banks allowed tosetup
joint ventures withlocal persons
withequity participation upto
50% after obtaining Licence from
theState Bank toundertake thesale
andpurchase offoreign currency
andtraveller cheques.(1)Unbound
(2)Unbound
(3)Unbound
(iii) Transmission ofpermissible funds
including foreign currency canbe
effected onlythrough authorized
banking channels.
(iv) Commercial banks incorporated in
Pakistan andthebranches offoreign
banks inoperation ason
30June 1997 allowed tooperate in
callmoney market.
(4)Unbound except asindicated under
horizontal measures.(4)Unbound except asindicated under
horizontal measures.S/FIN/W/12/Add.42
Page8Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
(f)Participation inissues of
allkinds ofsecurities
including onlypublic
underwriting and
placement asagent and
provision ofservices
related tosuch issues(1)Unbound
(2)Unbound
(3)Branches offoreign banks inoperations as
on30June 1997 andbanks (including
investment banks) incorporated in
Pakistan permitted toarrange and
participate inanypublic issue and
underwriting ofsecurities upto30% of
thetotalpaidupcapital oftheissuer or
30% oftheir respective paidupcapital
whichever isless. Allinvestments in
shares made asconsequence of
underwriting commitments(1)Unbound
(2)Unbound
(3)Unbound
must bereported forthwith totheCentral
Bank, andisrequired tobedisinvested
within 30days oftheinvestment as
approved bytheCentral Bank.
(4)Unbound except asindicated under
horizontal measures.(4)Unbound except asindicated under
horizontal measures.
(g)Settlement andclearing
services fornegotiable
instruments (cheques, bills
andpromissory notes
only)(1)Unbound
(2)Unbound
(3)Allcommercial banks arerequired tobe
members oftheclearing system
operated/approved byCentral Bank to
effect interbank settlement.(1)Unbound
(2)Unbound
(3)Unbound
(4)Unbound except asindicated under
horizontal measures.(4)Unbound except asindicated under
horizontal measures.S/FIN/W/12/Add.42
Page9Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
II.Leasing (1)Unbound (1)Unbound
(2)Unbound (2)Unbound
(3)Foreign leasing companies willbe
permitted tosetupsubsidiary leasing
companies inPakistan withshareholding
notexceeding 51% ofthetotalcapital to
undertake operational leasing including(3)None
cross-border leasing. Resource
mobilization from thedomestic market to
begoverned bythesame rules and
regulations asapplicable todomestic
mobilization ofresources.
(4)Unbound except asindicated under
horizontal measures.(4)Unbound except asindicated under
horizontal measures.
III.Asset Management: the
following only:
(a) Cash orportfolio
management;
(b) Allforms of
collective investment
management; and
(c) Custodial and
depository services.(1)Unbound
(2)Unbound
(3)(i) Banks incorporated inPakistan can
undertake portfolio management
services through their locally-
incorporated subsidiaries setupfor
thepurpose withshareholding in
such subsidiaries upto51%.
(ii) Management offoreign currency
assets willbegoverned bythe
foreign exchange regulations
applicable from timetotime.(1)Unbound
(2)Unbound
(3)NoneS/FIN/W/12/Add.42
Page10Modes ofsupply: (1)Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Limitations onnational treatment Additional commitments
(4)Unbound except asindicated under
horizontal measures.(4)Unbound except asindicated under
horizontal measures.
IV.Financial andinvestment
advisory services(1)Unbound
(2)Unbound(1)Unbound
(2)Unbound
(3)Banks incorporated inPakistan willbe
permitted toundertake financial and
advisory services through subsidiary
companies setupforthispurpose with
shareholding upto100% provided that
transactions undertaken/services provided
bysuch subsidiaries donotcreate any
financial obligations whether contingent or
otherwise onthebalance sheet ofthe
holding company orotherwise.(3)None
(4)Unbound (4)Unbound except asindicated under
horizontal measures.S/FIN/W/12/Add.42
Page11PAKISTAN
FINAL LIST OFARTICLE II(MFN) EXEMPTIONS INFINANCIAL SERVICES
Modes ofsupply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence ofnatural persons
Sector orsubsector Limitations onmarket access Countries towhich the
measure appliesIntended duration Conditions creating
theneed forthe
exemption
Banking andother financial
servicesForeign service promoters aregranted licences
onthebasis ofreciprocity.Allcountries Thereciprocity
requirement will
remain inplace until
similar measures
maintained byother
countries inthis
sector areremoved.Thereciprocity
requirement isputin
place toensure that
Pakistani banks are
accorded equivalent
market access in
places outside
Pakistan.
Financial institutions setuptoundertake Islamic
financing transactions.Allcountries Indefinite Thefinancing
transactions are
determined and
governed byReligious
Boards setupforthe
purpose byeach
Islamic financial
institution.S/FIN/W/12/Add.42
Page12Sector orsubsector Limitations onmarket access Countries towhich the
measure appliesIntended duration Conditions creating
theneed forthe
exemption
Separate regulations maybelaiddown forbanks
which arerequired toundertake andfinance
treasury function andother non-profitable
commodity operation programmes andother
price support schemes oftheGovernment.Allcountries Indefinite Commodity operation
programme isan
essential government
function undertaken
through banks.
Treasury function is
performed byNational
Bank ofPakistan on
behalf oftheCentral
Bank. These are
non-profitable
transactions ofthe
banks.
Financial institutions setupasjoint ventures
under theframework ofECO orother protocols
signed amongst theECO Member countries.ECO Member countries Indefinite TheTreaty ofIzmir
andtheIstanbul
Summit heldin
July1993 amongst
others decided forthe
establishment of
financial institutions
bythegovernments of
ECO Member states
withtheobligation of
meeting thegoals of
regional economic
integration.