RESTRICTED
WORLD TRADE S/FIN/W/12/Add.42/Rev.1
11December 1997
ORGANIZATION(97-5478)
Original: English Committee onTrade inFinancial Services
COMMUNICATION FROM PAKISTAN
Revised Offer onFinancial Services
Revision
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/Rev.1
Page2PAKISTAN
SCHEDULE OFSPECIFIC COMMITMENTS -REVISED 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 (1)Unbound
(2)Unbound(1)Unbound
(2)Unbound
(3)(a) Bound fortheexisting foreign
insurance services providers asto
their scope ofoperations andequity
structure.
(b) Maximum of25% offoreign
shareholding inexisting life
insurance companies.
(c) Foreign equity innewlifeinsurance
companies permitted upto51%.(3)Unbound
(4)Unbound except asindicated under
horizontal measures.(4)Unbound except asindicated under
horizontal measures.
- Non-life (1)Unbound
(2)Unbound(1)Unbound
(2)UnboundS/FIN/W/12/Add.42/Rev.1
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
(3)Bound fortheexisting foreign insurance
services providers astotheir scope of
operations andequity structure.(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)None
(2)Unbound
(3)Unbound
(4)Unbound except asindicated under
horizontal measures.(1)Unbound
(2)Unbound
(3)Unbound
(4)Unbound except asindicated under
horizontal measures.
B.Financial services
(excluding insurance)Thecommitments inFinancial Services
aregiven tothenationals andfinancial
institutions oftheMembers whose laws
andpolicies donotbartheprovision of
similar commitments tothePakistani
nationals andfinancial institutions.Provision ofallbanking andfinancial
services inPakistan aresubject tothe
injunctions regarding Islamic banking as
pronounced bythecompetent courts in
Pakistan.
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.S/FIN/W/12/Add.42/Rev.1
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
(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 required from the
Central Bank. TheLicence to
foreign banks willbeissued onthe
basis ofsame eligibility criteria as
applicable todomestic commercial
banks. Theminimum paid-up
capital required toundertake banking
business byforeign banks shall not
bemore thanwhat isrequired bythe
domestic commercial banks,
i.e.US$11.5 million. 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.S/FIN/W/12/Add.42/Rev.1
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
(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)Unbound
(b)Lending ofalltypes
including consumer credit,
mortgage, factoring,
credit andfinancing
commercial transaction(1)Unbound
(2)Unbound
(3)(i) Bound forthetotal volume of
foreign banks 'assets inPakistan at
thetime oftheconclusion ofthe
Negotiations 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.
Acquisition ofmanagement control
ofexisting public sector banks
considered oncase-by-case basis
under specific Sale-Purchase
Agreements tobeapproved bythe
Central Bank.S/FIN/W/12/Add.42/Rev.1
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
(4)Unbound except asindicated under
horizontal measures.(4)Employment offoreign nationals inbanks
andfinancial institutions operating in
Pakistan require prior clearance ofthe
Central Bank.
(c)Allpayment andmoney
transmission services
including traveller
cheques andbanker 's
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/Rev.1
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
12December 1997 allowed to
operate incallmoney market.
(4)Unbound except asindicated under
horizontal measures.(4)Unbound except asindicated under
horizontal measures.S/FIN/W/12/Add.42/Rev.1
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
on12December 1997 andbanks
(including investment banks) incorporated
inPakistan permitted toarrange and
participate inanypublic issue and
underwriting ofsecurities upto30% of
thetotalpaid-up capital oftheissuer or
30% oftheir respective paid-up capital
whichever isless. Allinvestments in
shares made asconsequence of
underwriting commitments must be
reported forthwith totheCentral Bank,
andisrequired tobedisinvested within
30days oftheinvestments asapproved by
theCentral Bank.(1)Unbound
(2)Unbound
(3)Unbound
(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 settlements.(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/Rev.1
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
cross-border leasing. Resource
mobilization from thedomestic market to
begoverned bythesame rules and
regulations asapplicable todomestic
mobilization ofresources.(3)None
(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) Entities licenced bytheCentral Bank
andbanks incorporated inPakistan
canundertake 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/Rev.1
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.
V.Provision andtransfer of
financial information and
financial data(1)Unbound, except fortheprovision of
publically available dataandfinancial
information oncorporate entities by
institutional providers having commercial
presence inPakistan.(1)Unbound
(2)Unbound (2)Unbound
(3)Unbound (3)Unbound
(4)Unbound except asindicated under
horizontal measures.(4)Unbound except asindicated under
horizontal measures.S/FIN/W/12/Add.42/Rev.1
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/Rev.1
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.