Free NIBAF Foreign Trade Certificate Exam Flashcards

The Foreign Exchange Regulation Act, 1947. The Foreign Exchange Manual is not itself a statute; it consolidates SBP's directions issued under FERA, which is why breaching a Manual paragraph is enforceable as a FERA contravention.

Sections 3(1) and 3(2) authorise a person to deal in foreign exchange, and SBP may restrict a licence to named currencies or named transaction types. Section 3B lets SBP withdraw an authorization already granted or bar a specific authorized branch.

The dealer must refuse the transaction. Chapter 2 also requires it to report the matter to the State Bank where it has reason to believe that contravention or evasion of FERA is being contemplated.

Chapter 10 inward and outward remittances, Chapter 12 exports, Chapter 13 imports, and Chapter 22 returns of all foreign exchange transactions. Commercial remittances sit separately in Chapter 14 and private remittances in Chapter 16.

The due date for payment or 120 days from the date of shipment, whichever is earlier, under SBP Notification No. F.E. 1/2022-SB dated 5 January 2022. The Authorized Dealer certifies that undertaking on Form-E or through Pakistan Single Window.

Shipments on DP, CAD or sight basis must be paid within 45 days of shipment. Terms providing 120 days' usance allow repatriation within 135 days. A 180-day window applies only where the export bills are discounted and sold forward to the dealer before shipment or within 14 days of it.

Three working days from the value date on the dealer's nostro account. The funds sit in a Special Exporters' Account during that window and may be sold to any Authorized Dealer within it.

USD 5,000 per month or 50% of the export proceeds, whichever is higher. Dealers must open the ESFCA alongside the primary rupee account and credit the permitted amount unless the exporter asks in writing for less.

120 days from the date of the advance payment, or 730 days for plant and machinery. Dealers may effect advance payment up to 100% of the letter of credit or invoice value, subject to due diligence under the TBML framework.

The dealer recovers an interim penalty of 0.1% per day of delay on the outstanding advance and deposits it to SBP monthly. FEOD may then refer the importer to the Foreign Exchange Adjudication Department for a final penalty under FERA.

Up to USD 50,000 for life-saving medicines and devices, and up to USD 10,000 for essential medicines and devices, aircraft spare parts, lab equipment imported by educational institutions, and newspapers, magazines and books.

A financial instrument covering the letter of credit, contract, collection or advance payment. Open-account exports need none. Settlement is then reported through a Bank Credit Advice for exports and a Bank Debit Advice for imports.

No later than 18 months after the last review, and sooner when trade activity changes significantly. SBP's revised TBML framework, issued by EPD Circular Letter No. 08 of 12 August 2025, also requires a trade risk rating separate from the general customer rating.

No. Article 4 makes the credit a separate transaction from the sale contract on which it may be based, so a bank's undertaking is not subject to the applicant's claims against the beneficiary even when the credit refers to that contract.

The documents alone. Article 5 states that banks deal with documents and not with the goods, services or performance to which the documents may relate. Damaged or missing cargo is a contract dispute, not a document discrepancy.

A maximum of five banking days following the day of presentation, under Article 14(b). That period is not curtailed by the credit's expiry date or its last day for presentation falling inside it.

Not later than 21 calendar days after the date of shipment, and in any event not later than the expiry date of the credit, under Article 14(c). A credit may specify a shorter period, which then displaces the 21 days.

A single notice stating that the bank refuses to honour or negotiate, every discrepancy relied on, and what the bank is doing with the documents. Wording such as 'documents not in order' fails Article 16 because it names no discrepancy.

The date of issuance, unless the bill of lading carries an on-board notation, in which case the date in that notation is the shipment date. Under Article 20 an 'intended vessel' indication always requires an on-board notation.

Release only against payment. Article 7 requires the collection instruction to state whether commercial documents go to the drawee against acceptance or against payment, and silence defaults to D/P. The collecting bank is not liable for the resulting delivery delay.

Seven work for any mode, including multimodal: EXW, FCA, CPT, CIP, DPU, DAP and DDP. Four are for sea or inland waterway only: FAS, FOB, CFR and CIF. DPU replaced DAT so that delivery need not happen at a terminal.

CIP, which requires cover at Institute Cargo Clauses (A) level under Incoterms 2020. CIF kept Institute Cargo Clauses (C) as its minimum, reflecting bulk commodity trade. Parties are always free to agree a higher level in the contract.

When the goods are on board the vessel at the port of shipment. Under CFR the seller still pays freight, and under CIF freight plus insurance, so those costs run past the point where risk has already transferred to the buyer.

FOB, FCA, FAS, CFR and CPT. Chapter 13 also allows EXW if remittance is made against presentation of shipping documents at the applicant's bank counter and the importer arranges insurance from the supplier's warehouse. Anything else needs FEOD approval.

Clean letters of credit and transferable letters of credit. Applications for either must be referred to FEOD, SBP-BSC, Karachi with full particulars. Time-based revolving letters of credit remain permissible on the terms in Chapter 13.

Under-invoicing, over-invoicing, short shipment, over shipment, obfuscation of the type of goods or services, and phantom shipment. Each transfers or receives excess value across the border by misstating the price, quantity or quality of the trade.

Any purchase of foreign currency in whatever form, including mail and telegraphic transfers, drafts, travellers cheques and bills of exchange. A debit to a bank's non-resident rupee account also counts. Purchases of foreign currency notes fall under Chapter 11 instead.

Any sale of foreign exchange in any form, including telegraphic transfers, mail transfers, drafts, travellers cheques and travellers letters of credit. It may also be effected by crediting the non-resident rupee account of a bank's overseas branch or correspondent.

Form 'I' covers remittances against imports, Form 'T-1' covers sale of exchange for travel, and Form 'M' covers all other remittances. The form chosen also decides which schedule the transaction lands on in the monthly return.

Instantly where the beneficiary banks with the recipient bank. Where the account is at another bank, the recipient bank passes funds and intimation within 24 hours, and the account-holding bank then credits instantly.

Sixty-five paisa per thousand rupees per day for each day the credit or payment was delayed. A pattern of delays found through inspection or complaints exposes the bank to penalties under the Banking Companies Ordinance, 1962.

Forward the draft agreement to SBP's Exchange Policy Department, whether the counterparty is inside or outside Pakistan. EPD comments on the draft, but the ultimate responsibility to safeguard the bank's interest stays with the bank.

An electronic Proceeds Realization Certificate in the standard e-PRC format. Dealers must provide a complete digital solution for automated issuance and verification under both the same-bank model and the different-bank model set out in SBP's guidelines.

As an inward remittance in the return covering the reversal. The return must carry a letter giving the date of the original return, the applicant's name and address, the original sale amount, the amount cancelled and the reason.

As an outward remittance on Form 'M', the usual trigger being that the beneficiary cannot be found. The supporting letter gives the original return date, the beneficiary's details, the original purchase amount, the amount cancelled and the reason.

Only where the normal means of transfer would cause the remitter unnecessary hardship or inconvenience. The draft must be issued in the name of the beneficiary and crossed 'Account Payee only' by the issuing bank.

No. An NRVA holder needs no approval to repatriate funds, so Form 'M' may be dispensed with. The Authorized Dealer still reports the outward remittance under the specified purpose code in the monthly foreign exchange returns.

No. Every application must reach SBP or SBP-BSC through an Authorized Dealer, which checks that the form is complete and signed, then stamps and signs it in token of having examined it. Applicants who present directly are told to resubmit through a dealer.

S-1 for transactions in each foreign currency, S-4 for transactions on the rupee accounts of non-resident banks, and S-6 for transactions in foreign currency notes. Each is an abstract of the dealer's ledger account with opening and closing balances.

By the 3rd of the following month from branches and by the 5th from head or principal offices. Schedules 'O' and 'P', which cover branches without their own currency position, may follow by the 17th.

A-1 lists purchases against a certified Form 'E'. A-2 lists cases with no Form 'E' at the time, meaning advance payments for goods still to be exported and part realizations. A-3 covers re-export of imported goods.

Schedule E-2, reporting sales of foreign currency against imports. Import bills received on collection are reported there too, supported by the original Form 'I' signed by the importer at the time the bill is retired.

Every inward receipt other than exports, listing Forms 'R' and inward remittance vouchers. Export receipts belong on Schedules A-1, A-2 and A-3 and must never appear on Schedule 'J'. A separate list is prepared for each currency.

For amounts over USD 10,000 received for purposes other than family maintenance and exports. Amounts of USD 10,000 or less, plus all family maintenance remittances, are consolidated on one IRV per currency, country and purpose for the whole month.

Code List 4 for exports and Code List 6 for imports. Code List 3 still codes countries, Code Lists 5 and 7 code invisible receipts and payments on the IMF balance of payments definitions, and Code List 8 codes departments.

By the 5th of the following month, with Form-E data submitted through the Data Acquisition Portal by the 4th. Misreporting, non-reporting or non-compliance attracts regulatory action under the Foreign Exchange Regulation Act, 1947.

The National Tax Number of the entity involved in the transaction. It goes on the basic document and is reported for every schedule entry, because without it the entity cannot be identified in SBP's balance of payments database.

Quarterly, reaching the FEOD area office by 12 April, 12 July, 12 October and 12 January. It reports operations on private non-resident rupee accounts, giving only the totals of credits, debits and balances for the period.

Fortnightly, drawn up as on the 15th and the last day of each month and reaching FEOD, SBP-BSC Karachi by the 22nd and the 7th. Figures are split between specific allocation and private sector imports.

Not more than 30 days from the date of approval, unless the approval expressly states a longer period or has been revalidated. An Authorized Dealer must not remit against an approval or permit that has lapsed.