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State Bank Of

The Pakistan
Bankers
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

Bankers 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

State Bank of Pakistan

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.

CORE VALUES

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

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

NIBAF

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 SBPBSC(HYD)
Currency Management Unit (CMU)
Treasury Cash Unit
Deposit Accounts Unit (DAU)
Public Accounts Unit (PAU)
Development Finance Unit (AFU)
1)Access To Finance Unit
2)Refinance Scheme Unit
3)Customer Facilitation Centre
Foreign Exchange Operations (FEOD)
Human Resources Department (HR)
Procurement Unit
1)Salary Advance Unit
2)Medical Welfare Unit
3)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

Currently Circulating Coins


Depiction
(Front)

Depiction Value
(Back)

Year in Composition
Use

Front
Illustration

Back Illustration

Rs. 1

1998 Bronze and


present Aluminum

Quaid-eAzam,
Muhammad
Ali Jinnah

Hazrat
LalShahbazQalandar
Mausoleum,
SehwanShareef

Rs. 2

1998 Brass and


present Aluminum

Crescent
and Star

Badshahi Masjid, Lahore

Rs. 5

2002 Cupro-nickel Crescent


present
and Star

Number "5"

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- COVERT
3- Covert / Forensic (Features For LABORATORY And AGENCIES)

Feature
s
See through

Latent Image

Anti-Copying Feature
Optical Variable Ink

Enlarged Watermark

Intaglio Lines
Electrotype Watermark

Micro Printing

Micro Printing

Identification
Mark
Window Security Thread

Geometrical Background

Embedded Features

Infrared Glowing

Ultraviolet Glowing

Currency Note Backing

Gold

Silver

SDR

Foreign Exchange

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.

Objectives (CMU)

Improve operational efficiency


Faster and accurate accounting
Strengthen monitoring and control
Maintain quality of notes in circulation
Prevent circulation of counterfeit notes

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

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 chests
of 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)

DENOMINATI
TOTAL QUOTA
ON

COUNTING
QUOTA

RELAXING
QUOTA

RS. 10

140000 pieces
(140 bundles)

21000 pieces
(21 bundles)

119000 pieces
(119 bundles)

RS. 20 & 50

40000 pieces
(40 bundles)

20000 pieces
(20 bundles)

20000 pieces
(20 bundles)

DEFACED NOTE

NOTE WITH TRIANGULAR CUT

Destruction Processes
1) Soiled notes destruction process
a) HUMAN banks
b) Other commercial bank
c) General public
2) Clearly defective note destruction process
a) HUMAN banks
b) Other commercial bank
c) General public
3) Claim notes destruction process
a) Claim accepted notes destruction process
b) Claim rejected notes destruction process.

Soiled Notes Destruction Process


(HUMAN Banks)
Counti
ng
packet
s/
bundle
s
Triple
Lock
System
Defaced
&
Single
Cut

Countin
g

Checking
Quantity
& Quality

Defac
ed

Special Procedure
Hall

Cut
Shreddi
ng
Burnin
g

Counti
ng

Destructi
on
Destruct
ion

Shreddin
g

Burnin
g

Soiled Notes Destruction Process


(Other Banks)

Soiled Notes Destruction Process


(General Public)

Clearly Payable Note Destruction


Process
(HUMAN Bank)

Destructi
on

Clearly Payable Note Destruction


Process
(Other Commercial Bank)

Pass

Shredding

Destruct
ion

Burning

Clearly Payable Note Destruction


Process
(General Public)

Note Category

Issuable Note
Fresh Note

Reissueble Note

Non-Issuable Note
Discolor
Oily
Washed / Rusty
Eaten by Insect or Animal
Torn into pieces more then 2
Mutilated Note
Charred Note

Non-Issuable Note
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

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 doesnt 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 Quaids 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.

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

CURRENCY CYCLE

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 PROCESS


Annual Indent by
State Bank of Pakistan
Pakistan Security Printing
Corporation
SBP BSC (Bank)

Soiled

Banks / Chests

General Public

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.

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, staffs payment as
salaries from main vault.
EXCHANGE BOX BALANCES:
It carries Reissueble notes which are needed to cover 4 counters:
1. Coin counter
2. Exchange counter
3. Heavy exchange counter
4. 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

Remittance of re-issuable and


soiled notes sent to SBP-BSC from
commercial banks

Potdar
Call
Packing
Call
Packing
Potdar

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

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

PROCESS OF RECEIVING

Non
Re-

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 SBPs 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.

CHESTS AND SUBCHESTS OF


SBP-BSC HYD

PREPARATION OF CHEST
SLIPS
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

CHEST MONITORING

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

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

Problems &
Solutions
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

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