A practical guide for importers, freelancers and businesses dealing with overseas payments.

Consider a hypothetical Karachi importer who receives an invoice from a German supplier. The goods are ready for shipment. The supplier wants payment, and the importer has enough money in his account.

His bank asks for the purchase agreement. He sends it. A few days later, the bank requests further information about the beneficiary. The supplier becomes impatient and threatens to cancel the order.

From the importer’s perspective, the bank has created an unnecessary obstacle. Yet the bank must answer a question beyond whether the customer can afford the transaction: Does the payment meet Pakistan’s foreign exchange requirements, and can the bank lawfully process it?

I spent years working with SWIFT and cross-border payments. A bank’s technical ability to send an international payment instruction does not establish its regulatory authority to release foreign exchange. A payment can satisfy SBP’s rules and still face a compliance review. It can also leave the sending bank and encounter a problem overseas.

What an Authorized Dealer Must Establish

Pakistan’s Foreign Exchange Regulation Act, 1947, provides the legal foundation for foreign exchange controls. The State Bank of Pakistan administers the framework through the Foreign Exchange Manual and subsequent regulatory instructions. Banks authorized to conduct foreign exchange business are known as Authorized Dealers.

When a customer requests an outward remittance, the bank must identify the applicable regulatory authority. An importer paying for machinery will normally be assessed under Chapter 13. Certain foreign services fall under Chapter 14, which covers commercial remittances. Chapter 10 establishes the general framework for inward and outward remittances, including prescribed application forms and procedures for cases requiring SBP approval. Later circulars may modify these instructions.

Why the Payment Purpose Matters

Suppose a Pakistani company wants to send $12,000 to a foreign supplier. The instruction describes the transaction as a business expense. Is the company buying equipment? Has it engaged a foreign consultant? Does the payment cover an annual software licence? The answers affect regulatory treatment.

Banks examine the economic purpose and compare it with the documents. A consultancy invoice should identify the services. Where a contract exists, its terms should support the amount. A payment directed to an unrelated third party may raise questions, even where the underlying purchase is genuine. There may be a lawful explanation, but the customer needs evidence.

Why an Invoice May Not Be Enough

An invoice establishes that someone has requested payment. It does not always prove a valid obligation. For foreign technical services, the bank may examine the agreement, services covered and payment schedule. Evidence of completion may matter for work already delivered. Advance payments have different conditions.

Chapter 14 sets documentary requirements for different commercial remittance categories. Some cases require information about obtaining services from abroad. Others may require a service completion certificate or an advance-payment undertaking. These are not universal requirements for every foreign payment. The bank must apply the provision governing the transaction.

When SBP Approval Is Required

Authorized Dealers have delegated powers to process specified transactions without individual SBP approval. Where a transaction falls outside delegated authority or a provision requires prior approval, the bank must follow the prescribed referral procedure. Commercial urgency does not replace permission.

A bank’s internal approval process should not be confused with SBP approval. A foreign exchange department may review documents before releasing a payment already permitted under delegated authority. Customers should ask which provision applies and whether the bank awaits an internal decision or an external approval.

Import Advance Payments: What Changed in 2024?

On January 30, 2024, SBP revised paragraph 30 of Chapter 13. Subject to appropriate due diligence and applicable conditions, Authorized Dealers may make advance payments for goods imports up to 100% of the value of an irrevocable letter of credit or invoice without prior SBP approval. The change expanded banks’ authority, not an unconditional right to remit. An importer should distinguish between a prohibition and a request for evidence before the bank exercises its delegated authority.

Why Compliance Screening Can Delay a Permitted Payment

Banks conduct anti-money laundering and counter-terrorist financing checks. They apply relevant sanctions requirements and risk-based controls. Chapter 14, paragraph 30, specifically requires due diligence from AML/CFT and foreign exchange risk perspectives.

A beneficiary name may resemble one on a sanctions list, or an unusual payment arrangement may require clarification. An alert is not proof of wrongdoing. Sometimes the problem emerges after transmission: an intermediary or beneficiary bank may request information. The Pakistani bank may then contact its customer. The underlying cause matters more than the word ‘pending’.

A Delayed Payment Is Not Necessarily a Rejected Payment

A transaction may await documentary approval, undergo internal compliance review or have already been transmitted. Before transmission, the originating bank can clarify whether an application is incomplete, under review or declined. After transmission, the bank may need to investigate a correspondent or beneficiary bank’s handling of the funds. Once sent, a receiving or intermediary institution may hold, reject or return it. These events should not be described as an SBP refusal without evidence.

A SWIFT payment message records the transmission of an instruction, not necessarily the settlement of funds or final credit to the beneficiary. A debit from the sender’s account is also not proof that the beneficiary received the payment. For payments using SWIFT tracking, the bank may investigate status using the payment reference, including a UETR where applicable. Ask whether the instruction was sent and which institution must act next.

What About Freelancers and IT Companies?

Freelancers and IT exporters may use Exporters’ Special Foreign Currency Accounts (ESFCAs). On April 6, 2026, SBP revised paragraph 12 of Chapter 12 to facilitate inward export receipts and outward payments for eligible IT companies and freelancers using these accounts. It also instructed Authorized Dealers to establish internal mechanisms for resolving their complaints promptly.

An eligible outward payment from an ESFCA should be assessed under the relevant framework rather than automatically treated as an ordinary commercial remittance. Eligibility, permitted uses and documents still matter.

What Should You Ask When a Payment Is Held?

Ask whether the bank accepted the application, which documents remain outstanding and whether SBP approval is necessary. If already sent, request the status and available tracking information. Where the bank refuses, seek the regulatory or procedural basis, subject to lawful disclosure limits. Banks cannot always reveal sensitive screening or investigation details.

How to Complain About an Unexplained Delay

Start with the bank’s formal complaint mechanism, including SBP’s Sunwai portal where appropriate. Identify the transaction, application date and actions already taken; preserve correspondence and payment references. Under the 2024 amendment to section 82D of the Banking Companies Ordinance, a customer should first approach the bank in writing. If the bank does not respond within 30 days, or its response is unsatisfactory, the customer may approach Banking Mohtasib Pakistan within the further 30-day period, subject to possible condonation for a justified delay. Some older guidance still mentions 45 days; the amended legal provision is the stronger authority. See the Banking Mohtasib’s November 2024 clarification.

Banking Mohtasib can examine qualifying banking-service complaints, including undue delays, but cannot waive foreign exchange restrictions or authorize a payment contrary to law. Poor handling and a lawful regulatory prohibition are different issues.

The Responsibility Does Not End With the Customer

A business may lose an overseas order because its payment remains unresolved. The bank has regulatory duties; the customer has a legitimate interest in knowing what happened. Better documentation reduces avoidable questions. Clear explanations distinguish missing evidence from a restriction requiring formal approval.

A payment awaiting internal approval cannot be traced as though it has already been transmitted. A transaction held by a correspondent bank cannot be resolved merely by resubmitting the invoice to the branch. When a bank says a foreign payment is pending, ask: Pending with whom, and for what reason? The answer determines whether the next step belongs to the customer, the Authorized Dealer, SBP or another bank in the payment chain.

If your Pakistani bank has already sent the payment but the beneficiary has not received it, read why an international payment can be stopped after leaving Pakistan. That guide focuses on correspondent banks, sanctions screening and overseas payment investigations.

What to Do When a Payment Is Returned

If the receiving or intermediary bank returns a transfer, ask the originating bank for the available return reason and a reconciliation of the refunded amount. Correspondent fees, bank charges or exchange-rate conversion may affect the amount credited back. The actual outcome depends on the payment arrangement and the reason for return; do not assume that every fee will be refunded.

Related Reading

Sending Business Payments Abroad from Pakistan: What Chapter 14 Really Allows

How a SWIFT Payment Actually Travels from Pakistan to an Overseas Bank

What Pakistani Bank Customers Should Know About Their Rights

Primary Regulatory Sources

• SBP Foreign Exchange Manual
• Chapter 14: Commercial Remittances
• SBP import advance-payment instructions
• SBP IT and freelancer instructions
• Banking Mohtasib Pakistan
• 2024 amendment to banking complaint timelines
• SBP Sunwai complaint portal

Regulatory information reviewed October 14, 2026. Requirements depend on the transaction category and subsequent SBP instructions.