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What are the specific conditions laid down by the State Bank of Pakistan for opening a blocked account?

 The State Bank of Pakistan has laid down specific conditions for opening a blocked account, primarily aimed at managing foreign exchange and ensuring compliance with regulatory requirements. Here are the key conditions:

Conditions for Opening a Blocked Account

  • Eligibility : A blocked account can only be opened in the name of a non-resident or jointly with a resident. A resident of Pakistan cannot open a blocked account solely in their name.
  • Authorized Dealers : Only banks that are authorized dealers in foreign exchange can maintain blocked accounts. In some cases, other banks may also be authorized by the State Bank to open such accounts.
  • Application Process : To initiate the opening of a blocked account, an application must be submitted to the State Bank, which includes:
    • Form A-7 : This form must clearly state the name of the payee and indicate that it is for a "Blocked Account."
  • Payment Instruments : Payments into a blocked account must be made via:
    • Banker's Payment Order : Marked as “payable to blocked account of [name] only.”
    • Crossed Check or Warrant : These should also be marked “Payable to blocked account of [name] only.”
  • Endorsement Requirements : The collecting bank must endorse any checks or drafts as “received for the credit of blocked account at [Bank and Branch].” The paying bank will not process these instruments unless they have been approved by the State Bank.
  • Restrictions on Withdrawals : Funds in a blocked account cannot be accessed until specific conditions are met, such as the account holder arriving in the destination country or receiving prior approval from the State Bank for any transactions involving these funds.
  • Investment Guidelines : The State Bank allows certain investments from blocked accounts in approved securities, but these transactions also require prior approval.
  • Special Instructions : The State Bank may issue additional instructions regarding operations on blocked accounts, and in the absence of such instructions, no payments into or withdrawals from these accounts are permitted without prior approval.
These conditions are designed to ensure that funds are managed appropriately and that they comply with Pakistan's foreign exchange regulations.

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