State Bank Of Pakistan

State Bank Of PakistanThe

Banker’s Bank

HISTORY

State Bank of Pakistan is a Central Bank. It was established after independence of Pakistan in 1947 and inaugurated by the founder of Pakistan and also first Governor General of Pakistan (Muhammad Ali Jinnah) in June 1948 under the State Bank of Pakistan Order 1948. State Bank of Pakistan commenced operation on July 1, 1948

STATE BANK OF PAKISTAN

Traditional Function

1- Primary Function

• Issuance of Bank Notes

• Regulation and Supervision

of the financial system

• Banker’s Bank

• Banker to Government

• Conduct Monitory policy

2 - Secondary Function:

• Agency functions like management

of public debt.

• Management of foreign exchange.

• Advising the Government on policy matters

• Maintaining close relationships with

international financial institutions

VISSION (SBP)

To transform SBP into a modern and dynamic central bank, highly professional and efficient fully equipped to play a meaningful role on sustainable basis, in the economic and social development of Pakistan.

MISSION (SBP)

To promote monitory and financial stability and foster a sound and dynamic financial system so as to achieve sustained and equitable economic growth and prosperity in Pakistan.

State Bank of Pakistan

State Bank has some core values that poses the major theme of work and add uniqueness in image of Bank.

SBP

CORE VALUES

State Bank of Pakistan has two subsidiaries NIBAF and SBP (BSC) which is a operational arm of State Bank of Pakistan.

SBP (Subsidiaries)

SBP (Policy)

NIBAFBSC

(Banking Service Corporation)

16 Field Offices

Banking Service Corporation - BSC

• Subsidiary of SBP • Operational Wing of SBP• Set up in Jan 2002• Responsibility of managing

1- Currency Management Operation

2- Foreign Exchange

3- Export & Other Finance

4- Maintaining of Government Accounts and

dealing with Government Certificates.

5- Maintaining Commercial Banks Accounts

State Bank of Pakistan – (BSC)Hyderabad

State Bank of Pakistan (BSC) – Hyderabad is one of the major field office among other 16 field offices. Which play a key role in providing financial services to Government, commercial banks and also general public.

Function of SBP - (BSC)Hyderabad

• Managing Currency: receipt, supply and exchange of bank notes and coins.

• Managing operational work related to debt and foreign exchange.

• Dealing in Savings Instruments e.g. Bond (sell, encashment, prize money).

• Collecting revenue & making payments for Govt.

• Disseminating SBP policies and initiatives .

Department of SBP- BSC(HYD)

•Currency Management Unit (CMU)•Treasury Cash Unit•Deposit Accounts Unit (DAU)•Public Accounts Unit (PAU)•Development Finance Unit (AFU)

1)Access To Finance Unit2)Refinance Scheme Unit 3)Customer Facilitation Centre

•Foreign Exchange Operations (FEOD)•Human Resources Department (HR)•Procurement Unit

1)Salary Advance Unit2)Medical Welfare Unit3)Central Receipt And Dispatch Unit

•Prize Bond Unit (PBU)•Internal Monitoring Unit •Staff Matters Unit •System Procedure Unit •Engineering And Maintenance Unit •Internal Security Unit.

Currency Management

&Treasury Cash

Bank Note / Currency Note

What is Currency

• Having General Acceptance• Including Coins & Paper Notes• Issued by Government And Circulated

With in Economy• Medium of Exchange• Bank Note • Negotiable Instruments

History of Pakistani Currency

Pakistani Rupee (PKR) is the Official Currency of Pakistan. It is issued by the state bank of Pakistan the central bank of the country. After independence of Pakistan in 1947.Initially Pakistan use Indian notes and coins over stamped of “Government of Pakistan”.

• First currency note was issued in 1st Oct 1948.• Other Note issuing was taken over by state bank in 1953.• 2, 5 10 and 100 rupees were issued.• 50 Rupees note were added in 1957.• 500 Rupees note were introduce in 1986.• 1000 Rupee in Next year.• Rupees 2 and 5 Note were replaced by coin in1998.

Liability of SBP

State Bank of Pakistan have authority to print currency note and circulate in country on the behalf of “ Government of Pakistan”. State bank print currency note of different denomination 10, 20, 50, 100, 500 and 1000, 5000. it is liability of state bank. it bears the guarantee clause by the State bank of Pakistan it is a promise to general public by the state bank. which is

This guarantee clause ensures people when they come to claim intrinsic value of currency note. State bank will definitely pay the bearer in coins, which is the commodity of the “Government of Pakistan”. And coins are the asset of the State bank of Pakistan.

COINS(Asset of SBP)

• Piece of hard metal use as a medium of

exchange

• Standardize in weight

• Issued by Government

• Made by metal and Alloy metal

• Usually Disc Shape

• Made by Valuable metal

• Government issue 1,2 and 5 rupee coin

• Minted in “ Pakistan Mint Lahore”

• Asset of State bank of Pakistan

Depiction (Front)

Depiction (Back)

Value Year in Use

Composition Front Illustration

Back Illustration

Rs. 1 1998 – present

Bronze and Aluminum

Quaid-e-Azam, Muhammad Ali Jinnah

HazratLalShahbazQalandar Mausoleum, SehwanShareef

Rs. 2 1998 – present

Brass and Aluminum

Crescent and Star

Badshahi Masjid, Lahore

Rs. 5 2002 – present

Cupro-nickel Crescent and Star

Number "5"

Currently Circulating Coins

Pakistan Security Printing Corporation ( Karachi)

• Currency Printing Press

• Located in Karachi Malir Halt

• Owned by the “ Government of Pakistan”

• Its Stakeholder is Government And State Bank

• It deals with Currency Notes, Prize bonds

• It print Currency on behalf of indent by the State

bank

• It also help state bank to fulfill the demand and

supply

of the currency throughout the country and maintain

economic stability

Security Features of Currency Note

Security features are:• Techniques, designs or any other characteristics• To protect the highly valuable documents

from forgery such as Bank notes, Bonds, and Saving certificate.

• Anti- Counterfeits

Classification of Security Features:

1- COVERT ( For General Public)2- SEMI- COVERT3- Covert / Forensic (Features For LABORATORY And AGENCIES)

 

Feature

s

Enlarged Watermark

Electrotype Watermark

Window Security Thread

Optical Variable Ink

See through

Latent Image

Intaglio Lines

IdentificationMark

Micro Printing

Geometrical Background

Anti-Copying Feature

Micro Printing

Embedded Features Infrared Glowing

Ultraviolet Glowing

Currency Note Backing

Gold Silver Foreign Exchange

SDR

Currency Management

• One of the core operations of SBP (BSC) • Under section 5(b) of (BSC) Ordinance2001, • It responsibility of handling receipt, supply and exchange of banknotes and coins on behalf of the State bank of Pakistan.

• Maintain public confidence in the currency by preserving its value and integrity and• Maintain available adequate stock of currency notes to meet the demand for currency and ensure proper functioning of the economy.

• Improve operational efficiency

• Faster and accurate accounting

• Strengthen monitoring and control

• Maintain quality of notes in circulation

• Prevent circulation of counterfeit notes

Objectives (CMU)

Issue Offices

State bank of Pakistan have four major issue offices. Which cover four provinces of Pakistan

ISSUE OFFICES / CIRCLES

KARACHI(SINDH

PROVINCE)

LAHORE(PUNJAB

PROVINCE)

PESHAWAR(KPK

PROVINCE)

QUETTA(BALOCHISTA

N PROV)

Each issue office have a currency officer who is responsible for the management of the currency, all the accounting work related to the currency, remittance facilities and managing, monitoring and keeping in track all chestsof its particular province.

Function Of Currency Management

• Currency management and accounting

• Designing and printing of new currency

• Issue and distribution of banknotes and coins

• Keeping pace with latest security features

• Providing note and coins exchange facilities

• Withdrawal of soiled notes from circulation

• Cancellation and destruction of unit notes

• Anti-counterfeit measures

• Proper monitoring of cash at banks

• Control of chest operations

Stakeholders

Internal Stakeholders

• Employees of the Bank (Serving & Retired)• Field offices• State Bank of Pakistan

External Stakeholders

• Pakistan Security Printing Corporation (PSPC)• Government of Pakistan (Federal & Provincial)• General Public• National Bank of Pakistan (NBP) as Chest• Commercial/Scheduled banks• Pakistan Railways• Pakistan Mint• Pakistan Police/ FIA• CDNS (Central Directorate of National Savings)

Destruction of Currency Notes

Special Procedure Unit

• For making counting of small denominations Rs.10, 20 & 50 of notes quicker• Representative sample of total packets is taken for counting only

– Relaxed quota (given triangular cut)– Counted Quota (defaced → punched with 3 holes)

DENOMINATION

TOTAL QUOTA COUNTING

QUOTA RELAXING

QUOTA

RS. 10140000 pieces(140 bundles)

21000 pieces(21 bundles)

119000 pieces(119 bundles)

RS. 20 & 5040000 pieces(40 bundles)

20000 pieces(20 bundles)

20000 pieces(20 bundles)

DEFACED NOTE

NOTE WITH TRIANGULAR CUT

1) Soiled notes destruction processa) HUMAN banksb) Other commercial bankc) General public

2) Clearly defective note destruction process a) HUMAN banksb) Other commercial bankc) General public

3) Claim notes destruction process a) Claim accepted notes destruction processb) Claim rejected notes destruction process.

Destruction Processes

Countingpackets/bundles

Triple Lock System

Checking Quantity & Quality

Defaced &

Single Cut

Counting

Defaced

Cut

Counting

Special Procedure Hall

Special Procedure Hall

Shredding

Burning

DestructionDestruction

DestructionDestruction Shredding Burning

Soiled Notes Destruction Process(HUMAN Banks)

Soiled notes from Other

Banks

Other Bank Deposit Hall

Cancel Note Vault

Verification Department

Destruction

Soiled Notes Destruction Process(Other Banks)

Soiled Notes Destruction Process (General Public)

DestructionDestruction

Clearly Payable Note Destruction Process

(HUMAN Bank)

Defective notes from

Other BanksExaminatiion

Hall

Cancel Note Vault

Verification Department

Shredding Machine

Pass

Shredding BurningDestructionDestruction

Clearly Payable Note Destruction Process

(Other Commercial Bank)

Clearly Payable Note Destruction Process

(General Public)

Issuable Note Non-Issuable Note

Fresh Note Reissueble Note

DiscolorOilyWashed / RustyEaten by Insect or AnimalTorn into pieces more then 2Mutilated NoteCharred Note

Note Category

Clearly Payable Note:

Signature On Note Stamp Numbers Lines Intact Into Two pieces (horizontal,

Vertical)

Cancel / Deface / Reject

Right Side Cut Hexagonal Cut Political Slogan Mobile Numbers Damage Quid Portrait Deliberately Tone Sharp Cut Mismatch Missing series

numbers, thread etc

Non-Issuable Note

Handling of Non-Issuable Note

CLAIM NOTES Notes which come under the section of claim notes are as follows. • Washed,• Chemically affected • Oily • Discolor • Eaten by insect or animal• Torn into more than two pieces• Partly burnt

CLAIM NOTE COUNTER In claim counter, currencies of higher denominations 500, 1000, 5000 are claimed. Client can only make request for the exchange value of claim notes. He/she doesn’t have any right for that. It is up to the SBP-BSC to accept or reject the claim. The claimed amount will be after a gap of one day.

PASSING AUTHORITY OF CLAIM NOTES

• Denominations of 500 and 1000 notes are verified by treasury officer and deputy chief manager jointly.• Denomination of 5000 note is verified by deputy chief manager and chief manager jointly.

VALUES OF NOTES THAT ARE NOT PAYABLE

• Note having a sharp cut • Half or less than half of a full note • Deliberately mutilated or tempered• Carrying a message of political party • Portrait of Quaid-e-Azam is desecrated• Already cancelled by and office of SBP BSC.• Thread missing

Clearly payable notes

• Notes that are partially cut, damaged, torn, slightly burnt.• Lines on Quaid’s photo• Torn into two pieces horizontally or vertically• Provided a major (3/4th) 75% portion of the same remain intact with identifiable main security features are clearly payable notes.

Clearly PAYABLE DEFECTIVE NOTE COUNTER

At this counter notes of all denominations are paid directly in exchange for the defective notes. And the notes are paid at the moment.

PASSING AUTHORITY OF CLEARLY PAYABLE NOTE

• Passing authority of denomination of Rs.10 & 20 is with the Assistant Treasury Officer.• Passing authority of Rs.50 & 100 is jointly with the Assistant Treasury Officer & Treasury Officer.• Passing authority of denominations Rs.500 &1000 is jointly with the Treasury Officer and a Senior ACO from currency side& counter-signed by ACM/DCM (Cash). Passing authority of denomination of Rs.5000 is jointly with the Treasury Officer & ACM (Currency Side)& counter-signed by DCM (Banking)/Currency Officer.

The frequent change of hands and excessive use in retail market makes the note limp and dirty are considered as soiled notes.

SOILED NOTES

Currency cycle is a process of circulating the money from the place of printing to the destruction of that currency within the 16 SBP BSC branches. All over the world the life of a currency note is directly proportionate to the denominations of notes, higher the denomination longer the life and vice versa. Overall the life of currency notes in third world countries like ours is even lower as compared to the rest of the world, due to heavy use of physical cash in day to day high value transactions. Misuse of smaller denomination notes and substandard handling at the retail level is also a significant factor affecting the life span of currency notes in Pakistan.

CURRENCY CYCLE

Annual Indent by State Bank of Pakistan

Pakistan Security Printing Corporation

SBP BSC (Bank)

Banks / Chests

General Public

Soiled

CURRENCY CYCLE PROCESS

VAULTS, HALLS , COUNTERS AND BOX BALANCES.

Vault is a strong room or compartment (often made of steel) for safekeeping of valuables (currency), It is intended to protect their contents from theft, unauthorized use, fire, natural disasters, and other threats, just like a safe. Vaults are an integral part of the building within which they are built, using armored walls and a tightly fashioned door closed with a complex lock. Vaults of SBP-BSC were under shadow of high security of police and their doors had double locks.

VAULTS

• Main Vault :

• 1. Fresh notes

• 2.re-issuable notes

• 3. Cancelled notes

• Chest Vault :

• 1. NBP Hyd

• 2. NBP Dadu

• 3. NBP Sanghar

• 4. NBP Mirpurkhas

• Guaranteed Vault:

• 1. UBL

• 2.ABL

• 3.HBL

• 4.MCB

• Prize Bond Vault

• Coin Vault

HALLS

• Examination hall

• Special Procedure hall

• Other Banks Deposit Hall

COUNTERS

• Banking:

• 1.Govt.reciept

• 2.Govt.payment

• 3.Govt.pension

• 4.FBR

• Exchange:

• 1. Notes

• 2. Coins

• 3. Defective Notes

• 4.One window Claim

• Prize Bond:

• 1.Prize money (L)

• 2.Prize money (H)

• 3.Prize bond encashment(L)

• 4.Prize bond encashment(H)

• 5.Prze Bond sale(L)

• 6.Prize Bond sale (H)

• 7.Saving Certificate

Treasury Cash Division

BOX BALANCES

Box Balances are point of distribution to various counters and in-charge of these boxes in treasury officer. Following are 3 types of Box balances;

BANKING BOX BALANCE :

It carries payment to commercial banks, Prize money, prize bond encash, staff’s payment as salaries from main vault.

EXCHANGE BOX BALANCES: It carries Reissueble notes which are needed to cover 4 counters:

1. Coin counter2. Exchange counter3. Heavy exchange counter4. Defective note counter PRIZE BOND BOX:

It brings prize bonds from prize bond vault, Reissueble or fresh.

REMITTANCES

• Remittance is the inflow or outflow of the cash from SBP-BSC HYD.• Timings, place, amount, denomination and the information of movement of currency all are done in codes called Swift. This is the responsibility of the CMU to monitor the overall dispatch and receipts.• Remittance can be divided into two categories.

• Remittance Outside the city • Remittance Within the city

REMITTANCE OUTSIDE THE CITY

Remittance (inflow or outflow) outside the city Hyderabad can be further divided into three categories

• Remittance of fresh, re-issuable and soiled notes from SBP-BSC-I to any other branch of SBP-BSC-II

• Remittance of re-issuable and soiled notes sent to SBP-BSC from commercial banks PSPC (Karachi) to SBP-BSC HYD (fresh currency notes)

Remittance of fresh, re-issuable and soiled notes from SBP-BSC-I to any

other branch of SBP-BSC-II

• Packing• Potdar

SBP-BSC-I

Remittance of re-issuable and soiled notes sent to SBP-BSC from

commercial banks

• Packing• Potdar

• Call Human Bank

SBP-BSC-I

PSPC (KARACHI) to SBP-BSC HYD

Pakistan security printing corporation supply fresh currency notes to 4 issue offices (Karachi, Lahore, and Peshawar and Quetta) and 6 other offices of SBP-BSC (Rawalpindi, Islamabad, Faisalabad, Multan, Sukkur and Hyderabad). These offices further supply fresh currency notes to other offices and currency chests in their circle.

REMITTANCE WITHIN THE CITY OF HYDERABAD

Remittance within the city of Hyderabad can be divided into two sub categories Issuing by SBP-BSC-HYD Receiving BY SBP-BSC-HYD

1. ISSUING BY SBP-BSC-HYD WITH IN THE CITY (HUMAN /OTHER COMMERCIAL BANKS)

On behalf of SBP, it is important responsibility of the SBP-BSC to maintain sufficient stock and ensure adequate and timely supply of currency to all concerned . Commercial banks are provided with sufficient quantity of fresh notes for issue to their regular clients as well as walk-in customers. Notes will be issued only to the main branches and Main branches will distribute to its sub branch or half branches. Issuing of notes is being done on either

Monthly basis (fresh currency) Occasions (especially on EID festivals) (fresh currency) 40% of holding capacity (re-issuable)

Notes will be issued to

NBP (chest) commercial banks

• Cheque• Pass

HUMAN BANKS/ OTHER COMMERCIAL BANKS

PROCESS OF ISSUING

RECEIVING OF NOTES BY SBP-BSC-HYD WITHIN THE CITY (HUMAN BANK, OTHER

COMMERCIAL BANK)

All the banks are provided with the facility to deposit their surplus balances of cash with nearest field offices of SBP-BSC. Four big commercial banks are provided with the facility to deposit surplus stock of cash under guarantee scheme. Balances of other banks are accepted on day to day basis. Receivable notes can be either Re-issuable notes, soiled notes, Defective notes. Receiving is done from

• human bank • Other commercial bank

• Re-issuable notes• Non-issuable notes

HUMAN BANKS/ OTHER COMMERCIAL BANKS

PROCESS OF RECEIVING

And if the currency is receiving from HUMAN bank then it is being placed in the bounded vaults/chest vaults without being counted.

If that currency is received from other commercial bank the currency will be taken to examination hall and counting will be done, and finally the bank representative will be released.

CHEST OF SBP-BSC HYD

WHAT IS CHEST ?

• SBP has authorized NBP branches as a professional agent in smaller towns and remote rural areas to carry out the government treasury business and to provide the banking facilities to local banks. These NBP branches are known as Chest of SBP-BSC.

• Chest plays role of SBP as it is not available in some smaller regions. Hence, Chest is playing with SBP’s money.

WHY DOES SBP-BSC NEED A CHEST ?

• Wide area coverage of central banking facilities to the stakeholders.• Acts as a cash storage point/cast saving.• Meets emergent seasonal currency needs.• Facilitates the SBP clean note policy.• Satisfy the government business needs .• More realistic approach to monitor expansion/contraction of currency.

Hyderabad Tando M.khan Tando Allahyar Tando Adam Kotri

Sanghar Hala Matli Noushero feroz Nagarparker

Dadu Moro Shahadapur Khipro Sehwan

Mirpurkhas Kandhiaro sinjhoro Tando Bago Mehar

Badin samara Digri Mithi Johi

Nawabshah Diplo Chachro Umerkot

CHESTS AND SUBCHESTS OF SBP-BSC HYD

• Chest slip is being prepared by cash department which contains all the information of remittance issued and received from chest and the information about amount of withdrawal and Amount of deposits. It contains the information about the quantity of Bank notes with different denominations and Coins with separate information about New design notes And Old design notes.

There are two types of Chest slips:

SBP to SBP(head office) Exchange Currency transfer Cancelled Notes Remittance

NBP( National Bank of Pakistan) Exchange Remittance

PREPARATION OF CHEST SLIPS

• To verify the chest balance are kept according to the holding capacity

• To make sure the strict security arrangement are in place at the chests

• To ascertain that the cash related equipments are available and in proper working order for smooth operation of the chest branch.

note counting machine

counterfeit detectors

• To verify the chest balance is being used as

per instructions

CHEST MONITORING

• To verify the quality (forged notes) and quantity (number) of currency notes and coins balances

held with the chest as per the returns submitted by them to SBP BSC offices.

• To check the record of chest slip with particular reference to the currency chest register.

• To observe that the vault where currency stock has been kept is operated strictly under double

locking system.

• To check the physical condition of the strong room and vault with regard to structural soundness

and availability of enough space

Problem # 1: Forged Notes in Circulation

Solutions:• A deadline & penalty for modern equipment in banks• Awareness campaigns on TV & Newspapers• A marketplace-oriented campaign• More security features, such as holograms• Encourage crime reporting through rewards

Problems & Solutions

Problem # 2: Bad quality notes in Circulation

Solutions:• Encourage people to respect to the currency note• Educate market traders to handle notes cleanly• Fresh notes may be issued frequently which will

– Remove pressure on SBP on EID– Lead to loss of business for money changers

• Change to a more durable material for notes

THANKS