FOREIGN CURRENCY ACCOUNTS – NOW AND BEFORE

FOREIGN CURRENCY ACCOUNTS NOW AND BEFORE <!--[if gte mso 9]> FOREIGN CURRENCY ACCOUNTS NOW AND BEFORE By Dr. Ilyas Zafar, Advocate, Supreme Court Foreign currency means the coins or bills constituting money in a foreign country. The words "currency" and "foreign currency" both have been defined in sub-sections (b) and (c) of section 2 of the Foreign Exchange Regulation Act, 1947 as under:-‑ (b) "Currency" includes all coins, currency notes bank notes postal notes, money orders, cheques, drafts, traveler's cheques letters of credit, bills of exchange and promissory notes; (c) "Foreign Currency" means any currency other than Pakistan Currency; The definition of "currency" given above is not exhaustive. Foreign currency is one which is issued not by Pakistan Government or under its authority but one which is issued by some other Government or under its authority, which can be converted into Pakistan currency subject to rules and regulations framed by the State Bank of Pakistan. In this Article, the theme is in respect of implications pertaining to Foreign Currency Accounts dealt in income tax proceedings. Foreign Currency Accounts are regulated through Foreign Exchange Regulation Apt, 1947 and the word "Foreign Exchange" has also been defined in section 2(d) which means Foreign Currency and includes any instrument drawn, accepted, made or issued under clause (8) of section 17 of the State Bank of Pakistan Act, 1956, and includes all deposits, credits and balances payable in any foreign currency, and any drafts, traveller's cheques, letters of credit and bill of exchange, expressed or drawn in Pakistan currency but payable in any foreign currency. The system of exchange control was established in India on the out-break of war in 1939, for the purposes of conserving and directing for the best utilization of the limited stocks of foreign exchange accessable. Various rules were made under' the Defence of India Act, 1939 to steer the effective control, which expired in September, 1946 but were continued under Emergency Provisions (Continuance) Ordinance, 1946 and remained in force until the passing of Foreign Exchange Regulation Act, 1947. This Act continued to he enforced in Pakistan after August, 1947 but was not strictly applied up to 1956, when the State Bank of Pakistan Act was legislated, to conduct the monetary and credit systems of Pakistan. The inherited law of Foreign Exchange, adapted since 25th March, 1947, has however, been modified from time to time, and all foreign exchange transactions are thus regulated by the Foreign Exchange Regulation Act, 1947, and are controlled by State Bank of Pakistan. The State Bank has further licensed various Commercial Banks, Firms and Commercial establishments to administer day to day foreign exchange transactions, which are termed as authorized dealers and authorized money changers. Under the statutory authority, the State Bank of Pakistan issues exchange control regulations, which are contained, in the State Bank of Pakistan Exchange Control Manual. These regulations cover the directions, rules and orders issued by State Bank and includes athorised Rates, Forward Exchange Facilities, Foreign Currency Accounts of Authorised Dealers and the Purchase and Sale of Foreign Currencies, Private Currency Account, Non-Resident Rupee Accounts of Foreign Bank Branches and Correspondents, Private Non-Resident Accounts, Blocked Accounts, Inward and Outward Remittances, Dealings in Foreign Currency Notes and Coins, etc., Exports, Imports, Commercial. Remittance (other than for imports), Insurance Business, Private Remittances, Travel, Import and Export of Currency Notes and Coins, Foreign Exchange, Jewellery, Gold and Silver, Loans, Overdrafts and Guarantees, Securities, Repatriation of Invisible Earning of Foreign Exchange and Returns of all Foreign Exchange Transactions. Foreign Exchange Regulation Act, 1947, extends to whole of Pakistan and applies to all citizens of Pakistan, residing anywhere in the world and persons in the Service of Government wherever they may be Nature of proceedings under this Act are quasi-criminal in character. Need for encouraging the inflow of foreign exchange has been always felt and certain provisions were made in early 70s, in the repealed Income-tax Act, 1922 that origin of fund remitted from abroad for non-repatriable industrial investment should not be questioned. Similarly the Assessing Officers were directed not to probe into the source of foreign exchange earnings brought into Pakistan through proper banking channels for industrial investments etc. clause (6A) in Part IV of the 2nd Schedule to the Income Tax Ordinance, 1979 was inserted through S.R.O. 219 (1)/91 dated 16th March, 1991, which reads as under: (6A) The provisions of section 13, Chapter XI or Chapter XII shall not apply in respect of any amount of foreign exchange deposited in a private Foreign Currency Account held with an authorized bank in Pakistan in accordance with the Foreign Currency Accounts introduced by The State Bank of Pakistan. Proviso to it was also added through S.R.O. 1344(1)/99 dated 16th December, 1999 as under: "Provided that the exemption under this clause shall not be available in respect of any incremental deposits made on or after the l6th day of December, 1999 in such accounts held by a resident person or in respect of accounts deposited in accounts opened on or after the said date by such person." During this period, clauses (6D) and (6HA) were inserted through SRO 871(1)/98 dated 5-8-98, as under: (6D) The provisions of section 13 or 65 or Chapter XI or Chapter XII shall not apply in respect of rupees withdrawn or assets related out of such withdrawal in rupees from private foreign Currency accounts, or encashment of Foreign Exchange Bearer Certificates, U. S. Dollar Bearer Certificates and Foreign Currency Bearer Certificates. (6HA) The provisions of section 13 and Chapter XI and XII shall not apply in respect of any amount invested by a Foreign Currency Account holder in the purchase of Special U.S. Dollar Bonds, issued under the Special U.S. Dollar Bond Rules, 1998. Proviso to it was also added through S.R.O. 1344(1)/99 on 16th December, 1999 as under:-‑ "Provided that the exemption under this clause shall not be available in respect of amounts invested in the Bonds Purchased out of Incremental deposit made in the existing foreign currency accounts on or after the 16th day of December, 1999, or out of the foreign currency accounts opened on or after the said date." Another clause (10C) was also added through S.R.O. 111(1)/98 dated 20th February, 1998 as under:-‑ (10C) The provision of subsection (2) of section 50 shall not apply to any payment made by way of interest earned by banks on Foreign Currency Bearer Certificates issued under the Three-Years Foreign Currency Bearer Certificates Rules, 1997, discounted by them and held in their own portfolios. New corresponding subsection (2A) was also added in section 13 of the late Ordinance, through F.O. 2001, as under: (2A) The provisions of this section shall not apply in respect of any amount of foreign exchange remitted from abroad through normal banking channels and got encashed in Pakistan rupee from a scheduled bank and certificate is produced to that effect from such bank. The Government of Pakistan introduced a number of economic reforms to create a liberal environment for saving and investment and in order to release the economic resources and potentials of the country from unnecessary control and regulation for its rapid industrialization and to provide equitable,, economic opportunity for all sections of the society. For this purpose the Government of Pakistan promulgated a new law as the Protection of Economic Reforms Ordinance, 1991 on 11th August, 1991, which was adapted as the Protection of Economic Reforms Act, 1992 on 28th July, 1992 for furtherance and protection of Economic Reforms. Section 5 of the said Act, which is relevant to the issue, reads as under:-‑ Section 5. Immunities to foreign currency accounts:-‑ (1) All citizens of Pakistan resident in Pakistan or outside Pakistan who hold foreign currency accounts in Pakistan, and all other *persons who hold such accounts, shall continue to enjoy immunity against any enquiry from the Income Tax Department or any other taxation authority as to the source of financing of the foreign currency accounts. (2) The balances in the foreign currency accounts and income there from shall continue to remain exempted from the levy of wealth tax and income-tax and compulsory deduction of Zakat at source. (3) The bank shall maintain complete secrecy in respect of transaction in the foreign currency accounts. (4) The State Bank of Pakistan or other banks shall not impose any restrictions on deposits in and withdrawals from the foreign currency accounts and restrictions, if any, shall stand withdrawn forthwith. *Persons include an individual, a firm, an association of persons, a Hindu undivided family, a company, a local authority and every other artificial juridical person;" as per section 2 (32) of The Income Tax Ordinance, 1979. Analogous and corresponding provisions were made in the Income Tax Ordinance, 1979 as under;-‑ Clause (78) of Part I of 2nd Schedule of late Ordinance of 1979 exempted any interest income derived from foreign currency accounts saying: (78) "Any interest derived from foreign currency accounts held with the authorized banks in Pakistan, in accordance with Foreign Currency Accounts Scheme introduced by The State Bank of Pakistan, by citizens of Pakistan and foreign national residing abroad, foreign association of persons, companies registered and operating abroad and foreign nationals residing in Pakistan." Clause (78A) was inserted by F: A., 1985 which exempted:-‑ (78A) Any interest (or profit) derived from a rupee account held with a scheduled bank in Pakistan by a citizen of Pakistan residing abroad (where the deposits in the said accounts are made exclusive from foreign exchange remitted into the said account). Clause (78B) was inserted by S.R.O. 219 (1)/91 dated March, 16, 1991 and exempted: (78B) "Any income derived from a private foreign currency account held with an authorized bank in Pakistan, in accordance with the Foreign Currency Accounts Scheme introduced by The State Bank of Pakistan by a resident citizen of Pakistan." Proviso to it was added by S.R.O. 1344(1)/99 dated December, 16, 1999 as under:-‑ "Provided that the exemption under this clause shall not be available in respect of any incremental deposits made in the said accounts on or after the 16th day of December, 1999, or in respect of any accounts opened under the said scheme on or after the said date." (explained in Circular No. 30/1999 dated 24th December, 1999) Clause (78C) was inserted by S.R.O. 111(I)/98 dated February, 19, 1998 exempting the income (78C) "The income of an individual, a firm, an institution or a body corporate, other than a bank or a financial institution, by way of interest on Foreign Currency Bearer Certificates issued under the three Years Foreign Currency Bearer Certificates Rules, 1997." Clause (78D) was inserted by S.R.O. 871 (1)/98 dated August 5, 1998 exempting any profit:-‑ (78D) "Any profit on Special U.S. Dollar Bonds issued under the Special U.S. Dollar Bond Rules, 1998." Proviso to it was added by S.R.O. 1344(1)/1999 dated December, 16, 1999 as under:-‑ "Provided that the exemption under this clause shall not apply to profits on the said bonds purchased by a resident person out of any incremental deposits made in the foreign currency accounts on or after the said date." (Explained in Circular No 30/1999 dated 24th December, 1999) After giving, and introducing all the above exemptions and immunities, instantly the Government of Pakistan promulgated Foreign Exchange (Temporary Restrictions) Ordinance, 1998 on 28th May, 1998 and Foreign Currency Accounts were frozen and all immunities given in the Economic Reforms Act, 1992 were suspended. The State Bank of Pakistan issued a F.E. Circular No. 12 on 29th May, 1998 and its relevant para.1 (ii), is reproduced hereunder:-‑ "Withdrawals form the existing foreign currency accounts-whether maintained by the resident or non-residents - have been temporarily suspended till further orders. State Bank of Pakistan is developing a criterion for allowing withdrawals from these accounts. Till such time as the criterion is developed, withdrawals may be made in Pakistan rupees if so desired by the account-holders. Payments in such cases may be made -----". The State Bank of Pakistan issued another F. E. Circular No. 17 dated 6th June, 1998 and its para-5, is given hereunder: 5 It is clarified that the special rate of exchange of Rs.46 to a dollar applies to those holders of foreign currency accounts, whether maintained by residents or non-residents, who will convert them into rupees before 1st September, 1998. These accounts will enjoy the following as announced by the Government: Exemption from probe by Tax Authorities. Banking confidentiality. Exemption from wealth tax for six (6) years according to details to be announced subsequently by Central Board of Revenue; and Exemption from Income Tax on the interest or profit earned on the dollar accounts before conversion. [It may be noted that these are the similar immunities as provided under section 5 of Economic Reforms Act, 1992] The State Bank of Pakistan issued another F. E. Circular No. 31, dated 2nd July, 1998 and its relevant Para `A' is given as under:-‑ A. All immunities in relation to the foreign exchange referred to in para.2 of Foreign Exchange (Temporary Restrictions) Ordinance, 1998 dated 28 May, 1998 stand restored for an indefinite period both for old and new foreign currency accounts as well as for the amounts that have been or will be converted into rupees. The Government is in the process of providing the necessary legal cover to this effect. (underlined for emphasis) Para.2 of the Foreign Exchange (Temporary Restrictions) Ordinance, 1998 is reproduced as under:-‑ "Notwithstanding anything contained in the Protection of Economic Reforms Act, 1992 (XII of 1992) but subject to section 3 it is hereby provided that during the period in which a Proclamation of Emergency under Article 232 of Constitution of Islamic Republic of Pakistan is inforce, the various protections contained in the said Act, or in any other law for the time being inforce, or in any agreement or contract, for or in relation to foreign exchange, or the right to bring, hold, sell, withdraw, transfer, pay or take out foreign exchange, shall remain suspended" It may be noted that those protections/immunities which were suspended by the Foreign Exchange (Temporary Restriction) Ordinance, 1998 (including exemption of income tax on interest income) were assured to be restored on converted rupees. In view of the assurances extended through Circulars Nos.17 and 31 issued by the State Bank of Pakistan read with para.2 of the Foreign Exchange (Temporary Restrictions), Ordinance, 1998 dated 28th May, 1998, and in view of restriction on withdrawal of foreign currency as placed by Government of Pakistan through Foreign Exchange (Temporary Restriction) Act dated 25-9-1998 certain persons including companies converted their foreign currency accounts into Pak Rupees A/cs. Clause (78E) was inserted by S.R.O. 871(1)/98 dated August 5, 1998 exempting: (78E) "Any profit of interest derived from Pakistan rupee account or certificates of deposits which have been created by conversion of a foreign currency account or deposit held on the 28th day of May, 1998, with a bank authorized under the Foreign Currency Accounts Scheme of State Bank of Pakistan." Provided that nothing contained in this clause shall apply to such Pakistan rupee account or certificates which are created out of foreign currency deposits which are not exempt under clauses (78) and (78B.) (78B) [added by S.R.O. 278(1)/2002 dated 20th May, 2002, which is w.e.f. 5th August, 1998]. Under clause (78E) the exemption was restricted to: - Citizens of Pakistan,* - Foreign national residing abroad, - Foreign association of persons, - Companies registered and operating abroad and foreign nationals residing in Pakistan (under section 78) - And resident citizen of Pakistan (under section 78 B). And the resident Companies, Firms and AOPs were thus excluded from this relief which was earlier available under section 5 of the Pakistan of Economic Reforms Act, 1992, although it was assured in Circular No. 17 dated 6-6-1998 and No 31 dated 2-7-1998 issued by State Bank of Pakistan. *Here the word "Citizen" refer to the bulk citizenship including corporate citizen. The word citizen normally means, the one who under the Constitution and laws of a particular State is a member of a political community, owing allegiance and leaving entitled to the enjoyments of full civil rights". The Company though a legal person, is not regarded as a citizen under the Constitution or under the Citizenship Act. But if the corporate veil is lifted, one finds the natural persons, in the form'6of shareholders admittedly the citizens, are there. Is there any justification to deprive them of their right, or can be discriminated, as they are collecting doing their business activity. It is accepted that a Company has its nationality, domicile and residence but not citizenship. In my opinion, it should be regarded as a Citizen for certain purposes, to avoid - discrimination between natural and artificial persons, at least to the extend of taxation matters, as the provision has not explicitly excluded the artificial persons. After giving the detail of old and new legal provisions, I come to the predicaments and disputes which have emanated out of them: By virtue of section 5(2) of the Protection of Economic Reforms Act, 1992, as given above, a company having the status of "Resident Person" got immunity/ exemption on the balances and income on its Foreign Currency A/c., kept on availing of this exemption despite temporary restrictions placed by Foreign Exchange (Temporary Restriction) Ordinance, 1998, dated 28-5-98 which was over-taken by Foreign Exchange (Temporary Restriction) Act, 1998, dated 28-5-98 effective from 28-5-98 The Act of 1998, by incorporation of section 3 in its body, reassured and resuscitated all the Protections and Immunities as conferred by the Act of 1992 saying that all the protection and immunities conferred in terms of the Protection of Economic Reforms Act, 1992, shall remain unaffected, and the Federal Government may make provision for the grant of further concessions for or in relation to, amounts converted from the foreign exchange. on the assurance and pledges emanated out of the relevant legislation and consequent S.R.O's., Certain Companies, converted their Foreign Currency Accounts into Rupee A/c. before the cut-date fixed by the Government and thus became legitimate expectant of all the Exemptions and Immunities accrued to such account. The benefit of section 5(2), of the' Act, 1992 regarding exemption of balance income/profits from payment of income tax was availed by it till the Assessment Year 1998-99. The said exemption was however, not provided by Income Tax Department for the Assessment Year 1999-2000 on wards. The facts goes that the Companies are mainly aggrieved from the amendment caused by force of Protection of Economic Reforms Ordinance, 1999, dated December 17, 1999 whereby proviso clause was inserted after section 5(2) of the Act, 1992. By this stroke, exemption as earlier available to all categories/classes was revoked in case of (i) citizens of Pakistan residing in Pakistan and (ii) Firms, Companies and other bodies registered or incorporated in Pakistan. In the matter of these Companies, the lifting of said exemption/ immunities, is applicable in respect of deposits created in existing FCA on or after 16 Day of December, 1999 or to any incremental deposits thereafter in a Foreign Currency Account. It is pertinent to note that by virtue of S.R.O. 278(1)/2002, resident citizen of Pakistan has also been given the exemption. This means that the Firms, Companies and other bodies registered or incorporated in Pakistan has been discriminated. The question arises that what is the fault of the Resident company, which converted their. FCA into Pak Rupees Account on the assurance extended to them by Foreign Exchange (Temporary Restriction) Act, 1998 date 25-9-1998 effective from 28-5-1998 and State Bank Circular No. 17 and 31 dated 6-6-98 and 2-7-1998 respectively Foreign Currency Accounts (Protection) Ordinance, 2001 was promulgated on 28 September, 2001 to provide protection to foreign currency accounts, which is in addition to the protection given in Protection of Economics Reforms Act, 1992. One can successfully moot the point of "Discrimination". However, there is another aspect of the matter. Even the legislature has been bypassed in the issue in hand as the legislature withdrew the exemption of section 5(2) in case of citizens of Pakistan, but this was granted by a subsequent above noted S.R.O. No.278(1)/2002. Why the people at the helm of the affairs of CBR have not cared the existence of a dictate of legislation while granting exemption to resident citizens of Pakistan. Reverting to the proviso introduced by the legislature by way of Amendment Ordinance, 1999, the exemption as available under section 5(2) of the Act, 1992 was abolished in case of FCA's of particular categories of beneficiaries from certain cut-date. We will have to ponder that whether the said Company, which is no more having FCA after its/theirs conversion into Rupee in the year of 1998, does also come within the mischief of this proviso. Prima facie the Company does not become the target of the bearer of FCA holder and on this analogy does not lose the benefit of exemption as earlier possessed and inherited by virtue of original text of section 5(2)of the Act, 1992. It is further added that while depriving the resident Firms/Companies through the Amendments Ordinance, 1999 from exemption available under original text of section 5(2) of the Act, 1992, the legislature might be having certain logic and reasoning, in the eyes of C.B.R., otherwise no reasoning seems justified, keeping in view the assurances and guarantees given by the Government authorities. In treating certain categories not only dissimilarly but discriminately. It can be foresighted that the impression of so called logic and reasoning has to be dispelled by the said Companies, while arguing their case. The discriminations as meted out to resident Firms/Companies by way of Amendment Ordinance, 1999. I am of the view that the vires of this piece of legislation, should be struck-down and proviso clause as now stands in section 5(2) of the Act, 1992, without having done so, the benefit of exemption obtained through the original text of section 5(2) of the Act, 1992 cannot be revalidated. There are so many resident Firms/Companies, which have borne the brunt of Amendment Ordinance, 1999. I would like to take the opportunity to familiarize the reader with the new provisions contained in the new Ordinance of 2001, which are epitomized hereunder for the purposes of comparison:-‑ Section 71. Currency conversion.---1. Every amount taken into account under this Ordinance shall be in Rupees. 2. Where an amount is in currency other than rupees, the amount shall be converted to the Rupee at The State Bank of Pakistan mid-exchange rate applying between the foreign currency and the Rupee on the date amount is taken into account for the purposes of this Ordinance. Section 76(5) regarding cost of an asset says:-‑ "Where an asset has been acquired by a person with a loan denominate in a foreign currency and, before full and final repayment of the loan, there is an increase or decrease in the liability of the person under the loan as expressed in Rupees, the amount by which the liability is increased or reduced shall be added to or deducted from the cost of the asset, as the case may be." Sections 102, 103 and 104 deal with the taxation of Foreign Source Income of residents. Clauses (75), (78), (81) and (83) of 2nd Schedule to the new Ordinance, 2001 allows the exemption as before, are as under:-‑ (75) Any income of an agency of a foreign Government. A foreign national (company, firm of association of person), or any non-resident person approved by the Federal Government for the purposes of this clause, from profit on moneys borrowed under a loan agreement or in respect of foreign currency instrument approved by the Federal Government. (Old clause 77). (78) Any profit on debt derived from foreign currency accounts held with authorized banks in Pakistan, in accordance with Foreign Currency Accounts Scheme introduced by the State Bank of Pakistan, by citizens of Pakistan and foreign nationals residing abroad, foreign association of persons, companies registered and operating abroad and foreign nationals residing in Pakistan. (Old clause 78). (80) Any income derived from a private foreign currency account held with an authorized bank in Pakistan, in accordance with the Foreign Currency Accounts Scheme introduced by the State Bank of Pakistan, by a resident individual who is a citizen of Pakistan: Provided that the exemption under this clause shall not be available in respect of any incremental deposits made in the said accounts on or after the 16 day of December, 1999, or in respect of any accounts opened under the said scheme on or after the said date. (Old clause 78B) (81) The income of a person, other than a bank or a financial institution, by way of interest on Foreign Currency Bearer Certificates issued under the three-Years Foreign Currency Bearer Certificates Rules, 1997. (Old clause 78 C) (83) Any profit on debt derived from Pak rupees account or certificates of deposit which have been created by conversion of a foreign currency account or deposit held on the 28th day of May, 1998, with a bank authorized under the Foreign Currency Accounts Scheme of State Bank of Pakistan. Provided that nothing contained in this clause shall apply to such Pak rupee account or certificates which are created out of foreign currency deposits which are not exempt under clauses (78) and (80) (Old clause 78 E) Clause (6) of Part II of the 2nd Schedule to the Income Tax Ordinance, 2001, allows reduction in Tax Rate as under: "In the case of resident person the profit on Special US Dollar Bonds purchased out of any incremental deposits made in the existing foreign currency accounts on or after the 16th day of December, 1999, or out of new accounts opened on or after the said date, shall be liable to deduction of income-tax under clause (c) of subsection (1) of section 151 at the rate of 10 per cent. of the amount of the said profit." (Old clause 4A) Clauses (5), (7), (8) and (10) of the Part IV of 2nd Schedule to the Income Tax Ordinance, 2001, allows the exemption from specific provisions as under: (5) The provisions of section 111 shall not apply in respect of any amount of foreign exchange deposited in a private Foreign Currency account held with an authorized bank in Pakistan in accordance with the Foreign Currency Accounts Scheme introduced by the State Bank of Pakistan. Provided that the exemption under this clause shall not be available in respect of any incremental deposits made on or after the 16th day of December, 1999 in such accounts held by a resident person or in respect of accounts deposited in accounts opened on or after the said date by such person. (Old clause 6A) (7) The provisions of section 111 shall not apply in respect of any amount invested in the acquisition of Three-Years Foreign Currency Bearer Certificates issued under the Foreign Currency Bearer Certificates Rules, 1997. (Old clause 6C) (8) The provision of section 111 shall not apply in respect of rupees withdrawn or assets created out of such withdrawal in Rupees from private foreign currency accounts, or encashment of Foreign Exchange Bearer Certificates, US Dollar Bearer Certificates and Foreign Currency Bearer Certificates. (Old clause 6D) (10) The provisions of section 111, Part X and Part XI of Chapter X shall not apply in respect of any amount invested in the purchase of Special US Dollar Bonds issued under the Special U.S. Dollar Bond Rules, 1998. Provided that the exemption under this clause shall not be available in respect of the amount invested in the said Bonds purchased out of incremental deposits made in the existing foreign currency accounts on or after 16th day of December, 1999, or out of foreign currency accounts opened on or after the said date, or on payment of the amount referred to in sub-rule (3) of rule 5 of Special U.S. Dollar Bond Rules, 1998 after the said date (Old clause 6HA) Foreign Currency Accounts of non-residents, residents including incremental and new accounts aggregated to 9, 679.0 M.US $ in 1997-98 which waned to 5,464.0 M. in 1998-99, 3920.8 M. in 1999-2000, to 3796.0 M. in 2000-01, 3291.7 M, in 2001-02 and 2588.3 M. in April, 2003. The rapid decline clearly show that there are some flaws and imperfections in the policies, pertaining to FCAs.