Professional Documents
Culture Documents
Muhammad Rehan”
who was always there to help and guide us when we needed help. His perceptive
criticism kept us working to make this project more full proof. We are thankful to
him for his encouraging and valuable support. Working under him was an
extremely knowledgeable and enriching experience for us. We are very thankful to
him for all the value addition and enhancement done to us.
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First of all I would like to thank that great entity that helped us to get
through this report safely, the one who was always there when no one was!
Would that I have words to pay tribute to our loving parents and teachers
whose invaluable prays salutary admire and embodying attitude kept our
spirit alive to strive for knowledge and integrity which enable us to reach
milestone.
We would also like to express enormous gratitude to our respectable teacher
“Mr. Muhammad Rehan” for providing the direction for this project and for
helping us in refining our effort and ideas.
I also acknowledge the help and pleasant gathering of all our class fellows. I
am also thankful to all of those people who helped us in accomplishing our
project.
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Deposit Account Unit………………………………….……04
Public Accounts Unit…………………………………….…14
Administration Unit……………………..……………….….22
Foreign Exchange Adjudication Division……………….…32
Development Finance Support Unit………………………..39
Currency Management Unit………………………………..41
Foreign Exchange Operation Unit…………………………53
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State Bank of Pakistan
Internship Program 2010
Group: 3
Unit Report:
OUR OBJECTIVES
Our objectives to visit the Unit are as under;
Importance or role of DAU in State Bank of Pakistan
Study the operations and functions of Deposit Accounts Unit
Its structure and nature of responsibilities
Check out the procedures and impediments in their procedure
Check out the flaws in their operational activities
Evaluation and suggestions for performance improvement of that Unit
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DEPOSIT ACCOUNTS UNIT
The most important Unit or department of State Bank of Pakistan is Deposit Accounts Unit. Its
roles are as prescribed under;
Page 5 of 57
1. Current Account
Every scheduled Bank is required to maintain a current Account at principal Office of State Bank
of Pakistan to perform and run their operation. There are 39 current Accounts maintained at
Faisalabad office from which 39 are active at SBP BSC (Bank). These offices provide facility to
other Banks to open current in SBP BSC (Bank) without any charges. Current Accounts are
maintained by DAU that is entrusted with the work of opening and maintaining the Current
Accounts of Scheduled and Non-Scheduled Banks and Other Foreign Banks.
Role of Current Account
This section deals with following activities:
Registration of Current Accounts of all commercial banks carrying out banking activities
Maintenance of cash balance with central bank
Accounts books are maintained here
Cash report on the daily transactions in commercial Banks
Power of attorney of all commercial banks with the names of authorized persons
Supervise the maintenance of statutory liquidity requirement (SLR) of commercial Banks
Scheduled Banks are required to keep with the State Bank certain percentage of their
demand and time liabilities
Schedule Banks required certain amount of excess reserves with the State Bank
In case they are not meeting SLR, Penalties are imposed upon them
Supply of cash in case of shortage in their balances
Scope of Current Account
Current Accounts scope is as under
It is the main regulatory tool to control all the commercial Banks
It conveys the standing position of a single Bank
Maximum & minimum balance limits on all commercial Banks current Accounts is
imposed. That’s why it serves the following purposes;
Securing the funds of general Public
Securing all other Bankers interest
Avoiding monopoly of a single Banker
Facilitate Inter-Bank payments
Buffer for statutory reserves in case of fluctuations in Banks demand and time liabilities.
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For settlement of transactions with Other Banks or for Clearing purposes
Maintaining balance Accounts of all Banks is more important task in the sector to
regulate their full impact on the Banking sector
This Unit examine whether commercial Banks are meeting their current Accounts &
statutory requirements
REASONS OF CURRENT ACCOUNTS OPENING
When they have excess amount above their holding capacity they can transfer in central
bank account
For settlement of transactions with Other Banks or for Clearing purposes
Liaison Office
When schedule Bank maintain principal Accounts and elect to submit returns and Statements
required of them under rules small section known as schedule Bank section.
Principle Office
An office where the statutory accounts of all the commercial Banks are maintained is called
principal Office. These are at State Bank of Pakistan Head Office Karachi.
Statutory Account
At statutory Accounts all commercial Banks have to maintain a SLR of 15% that is the minimum
requirement for every commercial Bank if SLR of any commercial Bank SLR decreases from
15% then subsidiary Accounts balance can also be maintained. Statutory Accounts generally
maintained by the principal representative of every commercial Bank.
Subsidiary Account
Some branches of commercial Banks also maintain accounts at their regional Offices of SBP,
their reserves are called subsidiary Accounts. If the combination of both the balances is not
fulfilling their reserve requirement then penalties should be imposed on them.
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Current Account Opening Procedure
2. Remittance Section
Page 8 of 57
It facilitates the movement of funds from one place to another place in Pakistan.
Conditions of transfer of funds
Movement of funds of commercial Banks
From branch to head Office
From head Office to branch
Movement of government funds
Movement of funds from SBP to out station
Facilitative the flow of funds smoothly and efficiently between various centers in the
country
Employee funds transfer
From employees of SBP to employees of SBP
From employees of SBP to general Public
Types of Remittances
Telegraphic transfer (T.T)
Mail transfer (M.T)
Bank draft (B.D)
Government draft (G.D)
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It facilitates the employees of SBP free of charge. It is the fastest way of fund transfer. Transfer
of funds between the employees of State Bank of Pakistan.
It benefits the employees in the fallowing ways;
Fastest way of money transfer
Employee can avail it free of charge
Physical movement of funds is avoided
Bank Draft (B.D)
It facilitates the employees to transfer the funds outside the SBP free of charge. It is basically
used for the official payments of SBP
It benefits the employees in the fallowing ways;
Facility to transfer funds to every place of the country
Free serviced
Government Draft (G.D)
It facilitates the transfer of receipt and Payment of government free of charges.
For example: Payment of salaries of government employees to any government department.
Receipts & Payments of government departments
Free facility to government
PAU facilitation
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3. Clean Cash
It is record of the daily receipts and payments balance of the State Bank of Pakistan. It is also
called Statement of Affairs of the Bank.
Maintenance and balance of cash is regulated and reported on daily basis to Head Office. All the
transactions regarding cash are adjusted by this section. All vouchers at the end of the day are
recorded in the books of Accounts. Receipt of vouchers from PAU and other unit is affected in
the clean cash book.
Importance of Clean Cash Book
The most important document of the Bank which States the net position of the Bank how
much it received and paid.
Record of the balances of all Bank transactions
Before its balance adjusted Bank closing is not possible
Statement of affairs of the Bank
Provincial-II (Food):
It deals with Government department which is engaged in Food & its product
For example:
Agriculture department
Additional Services:
Customer Facilitation Centre:
This unit receives the complaints of general Public regarding commercial Banks & financial
issues and provides them necessary information as demanded.
A separate telephone number is available for this purpose so that Public can contact &
communicate their problems and issues and an Officer of Grade-2 available to listen the
complaints of the general Public.
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Suggestions about Deposit Accounts Unit
It was observed:
In this Unit there should be a substitute of an employee in case of his absence or leave so
that it would not create burden on other coworkers.
As daily transaction and balance Statement is physically collected by the members of
commercial Banks so to facilitate the Banks SBP send this Statement to Banks through E-
mail.
Page 13 of 57
State Bank of Pakistan
Internship Program 2010
Group: 3
Unit Report:
OUR OBJECTIVES
Our objectives to visit the Unit are as under;
Importance or role of PAU in State Bank of Pakistan
Study the operations and functions of Deposit Accounts Unit
Its structure and head of responsibilities
Check out the procedures and impediments in their procedures
Check out the flaws in their operational activities
Evaluation and suggestions for performance improvement of that Unit
PAYMENT RECIEPT
CASH CASH
TRANSAFER TRANSFER
CLEARING CLEARING
Page 14 of 57
PUBLIC ACCOUNTS UNIT
This unit is the backbone of the State Bank of Pakistan. Being Banker to the government relating
its basic functions it plays a key role to perform central Bank obligations, collect taxes on behalf
of government which is the most important function of central Bank. Its roles are as prescribed
under;
Role of Public Accounts Unit
Dealing in government Accounts
Banker to the government & hold cash balances of government Accounts
Collections of taxes & Providing short term loan
Payment of salaries to employees of the government
Dealing with the receipts & payments of government sector
Balances and stock reports preparation with PAU data
Government Accounts maintenance & Transferring of funds on transactions
Daily closing of accounts at DAU with the record of PAU
Closing of Bank daily operations after sending PAU vouchers
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Cash Receipts & Payments
This section deals with the direct receipts and payments of government accounts. Now a days
cash transaction is usually discouraged at a larger extent. Most of the transactions are made on
account of transfer. Transfer account is made for the large denomination of transactions and are
carried through the process from commercial banks. In PAU only the payments will be made
against Provincial Government & Federal Government cheques.
If the entire particular are correct & verified. He will attached token with cheque then he will
place the stamp of signature verification and pass it if its value is Rs.20, 000 or less and Rs.20,
000 above will be passed by ACM.
Drawing and Disbursement Officer (DDO) or its representative specimen is already kept by
PAU. If new DDO is appointed than following document along with its specimen signature has
to provide to PAU.
Transfer letter
Charge Report
All the other documents
Schedule must be sealed
After it a new signature card is issued to new DDO. On passing cheques are sent to cash
department where from presenter get payment. At the end of working day cash department
prepare “Payment Statement” and returned it to PAU, on next day paid instruments are sent
backed to District Account Office. Daily and monthly statement is sent to DAU. Payment
Vouchers are also sent to DAU so that they can prepare the clean statement.
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CASH
SCHEDULE PREPARATION
RECIEVE
TOKEN VERIFICATION TALLYING OF
PRESENTING MONEY
ISSUED (FROM LIST WITH VOUCHERS
CHEQUE ON FROM CASH
AFTER OF SYESTAMATIC &
RECEPTION PAYMENT
SCURITNY RESPECTIVE REPORT DELIVERED
COUNTER
DEPTT.) TO DAU
DIRECTLY TICKING
PREPARATION
CASH ACCEPT INPUT/ WITH TRANSFER OF
CASH OF REPORTS
ALONG WITH AUTHORIZATIO SYESTMATIC PAYMENT TO
DEPARTMENT & ABSTRACT
CHALLAN N REPORT IN TREASURER
VOUCHERS
FORM PAU
Page 17 of 57
Transfer Receipts and Payments
Cheques are delivered to PAU by NIFT. When a cross cheque is issued by Provincial or Federal
Government to an individual or big firm, that firm or individual will present to his bank, bank
will hand over that check to NIFT which will bring that cheque to PAU clearing section. Most of
the transactions are carried through this process and the major source of transferring funds.
If entire particulars are correct and properly verified then checque will be passed as under
Type of Account
Its deals with the fallowing types of accounts.
Central-I ( Non- Food)
Provincial-I ( Non- Food)
Provincial-II (Food)
Provincial-IV (District Govt.)
Railway C-3
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1. TRANSFER
RECIEPT OF
CHEQUE/ CHECKING PREPARATION
PAID
WHOLE RECIEVING OF OF RECIEPT
SCHEDULE INSTRUMENT
PROCEDURE VOUCHER INSTRUMENT & DELIVER
MARKING SEND TO
AT PAU AT OR TO DAU TREASURER
INFORMATI SCURITNY
ON DESK
PREPARATION
DIRECTLY INPUTTING/ TICKING OF DISPATACH
DEPOSITED ABSTRACT
ON AUTHORIZA WITH TO
BY BANK VOUCHERS
COUNTER TION CHALLAN TREASURER
TO DAU
Page 19 of 57
Clearing Receipts and Payments
Cheques are delivered to PAU by NIFT. When a cross cheque is issued by Provincial or Federal
Government to an individual or big firm, that firm or individual will present to his bank, bank
will hand over that check to NIFT which will bring that cheque to PAU clearing section.
If entire particulars are correct and properly verified then checque will be passed as under
Type of Account
Central-I ( Non- Food)
Provincial-I ( Non- Food)
Provincial-II (Food)
Provincial-IV (District Govt.)
Railway C-3
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CLEARING
INPUTTING/
AUTHORIZAT DESPATCH
BANK SCURITNING TICKING
ION ABSTRACT VOUCHERS
CHEQUE OF INSTRUMENT PREPARATIO TO
PRESENTED INSTRUMENT & AFTER N RESPEFTIVE
BY NIFT VERIFICATION
PASS WITH TREASURER
LIMIT
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State Bank of Pakistan
Internship Program 2010
Group: 3
Unit Report:
Administration Department (AD)
Report to Administration Department (Head Office Karachi)
OUR OBJECTIVES
Our objectives to visit the Unit are as under;
Importance or role of Admin Department in State Bank of Pakistan
Study the operations and functions of Administration Department
Its structure and nature of responsibilities
Check out the procedures and impediments in their procedure
Check out the flaws in their operational activities
Evaluation and suggestions for performance improvement of that Department
ADMINISTRATION
DEPARTMENT
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ADMINISTRATION DEARTMENT
This is the administrative department of State Bank of Pakistan. Its roles are as prescribed
under;
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1. Staff Matters Unit
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Staff Benefits Unit
Sub-Sections
Salary section
Pension section
Loan & Advances section
Salary Section
There are two type of salary structure i.e. Officer Grade and Non-Officer (clerical and non
clerical)
There are three parts of salary slip:
Payment
Deduction
Net Payment
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Payments
It includes;
Monetized Salary
Education Allowance ( Clerical and Non-Clerical, Rs.500)
Telephone Allowance (OG-2 Rs.662 & for OG-3,4 Rs.1124)
Deductions
Income Tax (It will be charged if Taxable Income is more than Rs.300,000)
EUF(Employee Union Fund, Only Member of union, Temporary nature)
BF (Benevolent Fund is deducted from Rs.50 to Rs.250 from permanent employees;
amount of BF varies according to monetized salary. Amount equal to employee
contribution is also contributed by bank)
GTA (Group Term Insurance), it is charged from both contractual and regular
employee’s, its value varies according to monetized salary, deductions are made on
monthly bases and sent to Insurance Company, Rs.21 is contributed by bank for clerical
& Non-Clerical If additional benefits are availed then GTA value will be higher)
GPF (General Provident Fund, Employee’s contribution 5% of monetized salary)
GPF advance (If the employee age is more then 50 years then 80% of
balance in GPF a/c is allowed to encash and don’t need to pay back but if
below the age of 50 only 50% portion of balance amount can be advanced
and have to pay within 2 years
Regular recovery from salary
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Pension Section
Family Pension
If employee dies after retirement then his/her dependents will receive his/her pension.
Dependent:
Dependent will be the following persons.
Wife of employee
The Eldest child of employee either daughter or son.
Pension for wife is BF along with pension but boy and girl will only get pension.
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Age Limit
Son can get pension till the age of 21 but daughter can get till marriage
Wife can get the ¼ of pension along with BF, but if wife has died then eldest child will
get ¼ of pension without BF
When one child has passed the age of 21 years in case of boy and married in case of girl
then next eldest child will get the pension and so on
If a person has two wives then 50% will be given to each of them. If wife re-marries then
she will not be entitled to get pension
Types of Advances
Staff Loans in respect of;
House Building
Motor Car
Computer Loan
Personal Loan
To ensure removal of objections if any and resubmission of Staff Loans cases for sanctioning
Original title documents of properties against loan paid to the employees are also
maintained.
GPF Non refundable advance is also granted to employees.
Page 28 of 57
Medical Unit
Stakeholders
Internal Stakeholders
a. Employees of State Bank of Pakistan
External Stakeholders
a. Hospitals
b. Consultants
c. Laboratories
d. Medical Stores
e. Medicine Distribution Companies
f. Authorized Suppliers
Medicine slip
Medical facility is provided to employees and his/her dependents in the form of two doctors
(ACMO/ LBMC) who are available during the office timings in the premises of SBP-BSC.
Emergency slip
If any medicine is not available at the bank dispensary then an Emergency slip is issued and the
medicine can be taken from the authorized Medical store.
Reference slip
The doctor at bank can also refer the patient to another consultant, hospital or laboratory. They
are referred to the enlisted consultants, laboratories and hospitals. The rates for these hospitals
and consultants are approved HOK. Approved rates of HOK are intimated to the concerned
specialist and they are affective for the period of 3yrs. Any changes in rates can be made only
after 3yrs. The doctor issues Reference Slip with the name of hospital or consultant mentioned.
Page 29 of 57
From Other Office
The medical facility of Employees/dependents can also be transferred to other offices if the
employee is not satisfied with the consultant/hospital of the same office. They are generated on
receipt of request from employee & after CM approval.
Purchasing
The medicines are purchased from the authorized medical suppliers/distributors on monthly
basis. The minimum and maximum quantities required for the medicines are updated and
generated in MSS. The doctor can make any changes in the order according to requirements in, if
required. This purchase order is checked and verified by the authorized persons (ACM, DCM
and CM) and sent to the supplier. Three copies of Purchase Order are generated, 1st is for the
supplier, 2nd for the dispensary, 3rd for the medical unit as a proof for making payment. The stock
is available at the Main store of the bank and it is transferred to the Dispensary on the basis of
daily indent. Further, the medicines received from Store are manually recorded in the Stock
Register of Store. Daily indent is approved by the bank doctor. Availability of prescribed
medicines at Dispensary is ensured against fortnightly indent.
Stock
a. Receiving:
The items are received and are put in system. Only those items are received for which the
order is made. If the order is short then bill is made for the received goods only. And if the
goods received exceed the order quantity then they are returned to the supplier. The supplier
is credited after receiving goods.
b. Inspection:
The medicines are delivered to the main store of bank and they are inspected to make sure
that they are in required quantity, quality and order. The purchase order no. is checked and
matched in system and expiry dates are also checked.
c. Delivering:
After receiving and inspecting medicines, they are sent to the Main Store and then to the
Bank Dispensary on daily indent basis.
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Payment Procedure
In making payments, the employee PIN, reference slip and consultant/hospital rates are checked,
compared and verified. The signature of the employee and Bank’s doctor are also checked. The
case is audited and the voucher is generated. The invoice is approved by the authorized persons
in the hierarchy and forwarded for further processing. The distribution total and approved
amount should be same to make payment. The Accrual Account is transferred to Accounts
Payable account and all payments are made through A/P Module. Payment order/Bank Drafts are
sent to concerned quarter as soon as received from Deposit Account Unit (DAU).
Taxes
Income Tax Certificates to Suppliers of Medicines/Specialists/Hospitals/Clinics/Medical stores
are also generated as when required.
6% withholding tax is applied if the services exceed from Rs.10, 000.
3.5% withholding tax is applied if retail goods amount exceeds Rs. 25,000.
1% withholding tax is applied if trade goods amount exceeds Rs. 25,000.
Employee Reimbursement
The medical claims of employees are reimbursed by 100% incase of the enlisted consultants,
laboratories and hospitals and 70% if the services are acquired from Shaukat Khanum Memorial
Cancer Hospital and Agha Khan Hospital Laboratories.
Page 31 of 57
State Bank of Pakistan
Internship Program 2010
Group: 3
Unit Report:
OUR OBJECTIVES
Our objectives to visit the unit are as under
Importance or role of FEAD in State Bank of Pakistan
Study the operations and functions of Foreign Exchange Adjudication Division
Its structure and nature of responsibilities
Check out the procedures and impediments in their procedure
Check out the flaws in their operational activities
Evaluation and suggestions for performance improvement of that Division
foreign Exchange
Adjudication
Department (HOK)
Page 32 of 57
Foreign Exchange Adjudication Division
The division which deals with the cases related to the default foreign exchange dealings. When
the foreign exchange is not brought with proper channel then adjudication court deal with those
peoples and imposes penalties.
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In case of import violation payment is made in advance but goods are not yet received within
prescribed time period
(Violation of section 4(3) of Foreign Exchange Regulation Act 1947)
Invisible receipts
In case when invisible services are provided by any party and payment is not yet received For
Example;
Consultancy
Software development
Tourism services etc
(Violation of section 10 of Foreign Exchange Regulation Act 1947)
Page 34 of 57
Documents Required for the Complaint
FEOD sends a complaint to FEAD along with following necessary documents attached with
complaint:
1. Original copy of E-form (Original/Duplicate)
2. Copy of GD -1 (Goods declaration Form) acquired from custom office
3. Bill of lading/Airway Bill/Railway receipt/Truck receipt
4. Copy of commercial invoice
5. Copy of V-16
6. Copy of CNICs of all proprietors including directors and all partners of accused party
7. Copy of short shipment notice (In case of less shipment)
8. All notices issued to accused party by FEOD
9. Any reply from accused party (If Any)
10. Certificate of Non-Pendency by FEOD
11. Attach all correspondence of Accused party with bank
12. Scrutiny Sheet submitted by AD to FEOD
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Procedure for a Complaint
RECIEPT OF COMPLAINT
Scuritny of Document
PHOTOCOPIES OF FORM-E
If satisfactory Unsatisfactory
In case of no response Ex-Party then case closed or
proceeding started & Case
decided
Page 36 of 57
Appearance of person in FEAD
If accused plead guilty then penalty imposed If accused not p lead guilty then charge
on him is framed & copy of orders supplied to
him
File Closed
Page 37 of 57
Rules Regarding Penalties
Penalties are given to discourage detention of funds of Pakistan outside the country by
SBP
Adjudication officer can impose maximum penalty of 5 times of the exported value
Authorized dealers can be penalized with amount of Rs. 5000 or Rs. 2000 per day from the day of
default (In case of non / wrong submission of any information.
Recovery of Penalties
Copy of judgment sends to respective bank with the direction to debit his account. If
sufficient amount is not available a recovery certificate is made and sends to District
Officer Revenue.
Meeting with recovery officials.
Reminder are issued to the collector of the department
Suggestions
Penalties should be more tightened
Adjudication jurisdiction should be expanded to all FEOD operations
Page 38 of 57
State Bank of Pakistan
Internship Program 2010
Group: 3
Unit Report:
Report to:
Development finance support department
Scope of study:
Our objectives to study the unit
History of unit:
It was observed by SBP-BSC that provision of funds to remote sectors was not sufficient. Small
scale entrepreneurs and deserving people were not aware of financing policies announced by
SBP.
Development:
Development Finance Group (DFG)
Agriculture Credit
Departments
Micro finance
department
Islamic Banking
Department
SME finance
department
Page 39 of 57
DFG:
Then a group was formed to provide financial infrastructure for provision of financial services to
all segments of society and all sectors of the economy.
It establishes polices regarding financial issues.
It is engaged in enhancing the capacity to catalyze and facilitate expansion of financial services
in un-banked or under-banked areas or sectors.
DFSD:
This department was formed for the implementation of policies launched by DFG.
Objectives of DFSU:
To coordinate and interact with DFG and banks ( region wise & Branch wise)
To communicate the banks policies & schemes to stakeholders
To monitor banks performance towards achievements of their goals
Optimally target our resources to increase outreach of financial services in un-banked
areas
To aware general public about the beneficial schemes regarding financing.
To disseminate the information to stakeholders
Functions of DFSU:
This unit performs functions in field given below.
This unit encourages and develops stakeholders in following fields
Functions
Methodology:
Creation of Focus groups in relevant areas of each sector
i.e. Financial institutions
Academia
Internal/External stakeholders
Page 40 of 57
State Bank of Pakistan
Internship Program 2010
Group: 3
Unit Report:
OUR OBJECTIVES
Our objectives to visit the Unit are as under;
Importance or role of CMU in State Bank of Pakistan
Study the operations and functions of currency management Unit
Its structure and nature of responsibilities
Check out the procedures and impediments in their procedure
Check out the flaws in their operational activities
Evaluation and suggestions for performance improvement of that Unit
Page 41 of 57
CURRENCY MANAGEMENT UNIT
Currency management Unit is the most important Unit of State Bank of Pakistan. Issuing of
notes is the primary and basic function of State Bank of Pakistan. Central Bank has the sole right
to issue new notes to the general Public.
Role of Currency Management Unit
Issue notes & Note Design
Monitor the performance of all commercial Banks relating to cash & currency
Forge note dealing & Disposal of notes
Forecasting that how much currency will be needed in coming year
Its directs the working criteria to commercial Banks of circulation of notes
Physical transferring of funds to chest Offices
Record of currency note with its denomination
Note exchange facilities and Anti-counterfeit measures
Withdrawal of Soiled Notes from circulation and their destruction
Issue and Distribution of Fresh Notes and Coins
Plays supervisory & regulatory functions regarding distribution of currency
Arrange Currency operation in the country & Impose penalties
Scope of Currency Management Unit
The scope of that Unit is very wide and nature of it is very important in the SBP.
Maintain & manage currency and its secured distribution
Currency is issued by that Unit and note exchange facility
Destruction of soiled notes under normal/special procedure
Issuing of fresh notes for commercial Banks/chests
Facilitate to the general Public by the exchange of defective notes & private awareness
about anti-counterfeit measures
Withdrawal of old notes from circulation
Physical remittances are transferred from here
Remittances to SBP Offices
Remittances to chest Offices
Function as the government treasurer
Design rules, regulations, procedure and practices for currency management
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Note Issue Section
One of the primary responsibilities of the State Bank is the regulation of currency in accordance
with the requirements of business and the general Public. The overall affairs with respect to the
issuing of notes are conducted through this department. Every province Office of State Bank of
Pakistan has issuing Office according to 1956 act.
Functions of Note Issuing Section
It maintains the documentation of currency notes issued to Offices of SBP
It kept the record of currency of commercial Banks & also issue currency notes drawn by
commercial Banks as per required
Notes are issued to commercial Banks as per the volume of the funds and on the basis of
their branches
Reserve Maintenance
Notes are issued by maintaining supply and demand requirement, in order to avoid inflation
reserves are maintained in the form of;
Gold
Foreign Exchange
Government securities
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Life Cycle of Bank Notes
Page 44 of 57
Remittance Division
This division deals with the physical movement of funds between SBP Offices and other chest
Offices. This is the physical movement of cash. In issue Office currency Officer authorize to
pass the transfer of cash in case of excess cash in Office or shortage of cash in another Office.
Role of Remittance Section
Overseeing Currency Operations; Supply, Distribution, Withdrawal, Verification and
other applicable laws
Ensuring accurate booking/ reporting of various cash management Statements and taking
corrective measures
Issuing of Policy/Instructions to all the Field Offices regarding management of currency
Need assessment and procurement of cash handling and counterfeit detection equipments
in coordination with BSSD (SBP)
Its main function is to send a remittance of cash to different cities under its region:
Excessive funds collection from chest Offices
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REMMITANCE SENDING PROCEDURE
Page 46 of 57
NOTE CATEGORIES
Issuable Notes
Fresh notes
Re-issuable notes
Non-Issuable Notes
Soiled notes
Mutilated notes/defective notes
Claim notes
Charred notes
Promoting mass awareness activities among general Public about forged notes and clean note
policy by suggesting different cost effective means and overseeing/coordinating field Offices
activities in this regard. Analysis of international best practices on incorporation of security
features and combating counterfeiting.
Role of Forge Note Section
Role of this section is as under;
This division form rules and regulations in treating forge note case
Improving security features of Bank notes to avoid forging
Deals with different forge notes and research on these copying procedures
Design rules to stop copying currency notes
Dealing with forge cases and court
Maintain updated information regarding various modes of forgeries detected in
counterfeit notes/coins in circulation & provision thereof to law enforcement Agencies
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FORGE NOTE FILING PROCEDURE
Page 48 of 57
This Unit deals with two specific portions,
Cash monitoring
Clean note policy
Cash Monitoring
This section performs these tasks;
Supervision of currency
Make plan of whole year for visiting commercial Banks
Commercial Bank inspection regarding currency that are;
Commercial Banks are providing clean notes to general Public or not
Daily 2 Banks are being inspected without an intimation
New notes are issued to local peoples or not
Debit advice is send to commercial Banks incase there is shortage of cash in counting and
voucher send to DAU
Checking whether clean note policy is implemented or not
Monitoring and On-Site Inspection of Cash Operations
Minimize Public complaints regarding
check the sorting of notes and supply of good quality notes to the general
Public
Currency in good form is provided or not
Clean Note Policy
Clean note policy is to improve and enhance the condition of Bank notes those are in circulation
in the market. In order to increase the circulation of fresh notes, it is also essential that soiled
notes are withdrawn simultaneously from the circulation. For this purpose; BSC has introduced
various changes in the systems and procedures related to currency management mechanization.
BSC has taken a number of steps to improve the quality of Bank notes in circulation.
Role of Clean Note Policy
Maintaining a fresh notes in the market
Improvements in the quality and availability of notes
Technological up gradation in currency verification and destruction process
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CURRENCY VERIFICATION & DESTRUCTION SECTION
In view of the growing volume of notes in circulation and the limitations of existing system State
Bank has authorize commercial Banks to accept defeated notes from Public and present at State
Bank counter under special circumstances. And these notes are deal in that section.
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CLAIM COUNTER DIVISION
The exchange facility over Bank's counters is available free of cost during the business hours of
the respective field Office. The serial numbers of counters are displayed in Banking hall of each
field Office where exchange facility is available. The mutilated/cut notes are exchanged by BSC
as of grace under the “Note Refund Rules”. However, when the mutilated/cut note is not found
payable under the Rules, the same is rejected and rejection advice issued to the renderer. The
rejected note is retained by BSC and destroyed after six months.
Types of Claims
Two types of claims are made at this counter and paid to general Public without any charges.
Directly payable notes
Some notes issued at the counter are directly paid to the peoples fulfilling specific requirements.
75% portion not spoiled
Quaid-e-Azam picture un-teared
At least one number fully appeared
One or two pieces notes having both numbers
Oily, mutilated, defective notes and faint notes
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Suggestions for Improvement
It was observed:
Public awareness should be created to attain the clean note policy
Public should be fully aware of how much cost should SBP bear on issuing a single note
Black marketing of notes should be fully discouraged in order to avoid it strict polices should
be implemented
Remittance sending procedure should be changed due to much complicated steps are
fallowed like railway time, police dealing and very long procedure of sending a remittance
which cost much time wasting (Manual updating)
Forge note policies should also be stricted a large extent and SBP panel court should decide
that what to do with these criminals because of court long procedure and corruption setup.
Forge note criminals should not be tolerated
Forge note section should give suggestions to improve security features of notes by dealing
different forge cases
Unethical use of currency should be strictly prohibited and these new rules should be
developed like oil notes and other these are the misconduct of Public why they are not taking
at safe places. Rules should be changed a little and little bit strictness should be taken to
avoid large cost on new issuing notes and save government budget
Proper staff backup should be provided to every Unit in case of their absence, rotation or
transfer. So the other employees can perform effectively at their post
Punishment in case of forge notes should tightened mores
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State Bank of Pakistan
Internship Report 2010
Group: 3
Unit Report:
OUR OBJECTIVES
Our objectives to visit the unit are as under
To know the role of FEOD in State Bank of Pakistan
To Study the operations and functions of Foreign Exchange Operations Division
Its structure and nature of responsibilities
To Check the procedures and impediments in their procedure
To Check the flaws in their operational activities
Evaluation and suggestions for performance improvement of that Division
FOREIGN EXHANGE
OPERATIONS
DEPARTMENT
Imports/exchange
Return section
companies section Export section R & D/DLTL section Overdue section
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Foreign Exchange Operations Department:-
The division which deals with the cases related to the foreign exchange dealings. When the
foreign exchanges is brought into/ send out with proper channel the record of every transaction
of foreign exchange is maintained with A.D. This division basically deals with the post facto
checking of documentation of foreign exchange transaction carried out by an A.D during the
month. This department deals with the Commercial foreign exchange only.
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Types of Foreign Exchange
Commercial transaction
Non-Commercial
Non commercial foreign exchange consists of individual remittances of various nature.
Procedure:
State Bank of Pakistan has authorized certain branches of commercial banks to deal with
foreign exchange. These branches are called Authorized Dealers (Ads). First of all, the exporter
signs a contract with the importer abroad. Then he approaches any AD with the contract and
obtains an E- Form from it. On this E- Form all the details of the contract are written. Then if AD
is satisfied, after fulfillment of its requirements, it provides the exporters with requisite finance.
Then AD submits all these documents to SBP through this Unit. SBP after checking all these
documents provides finance to the AD. AD charges 8.5 % interest from the exporters out of
which 7.5 % goes to SBP and 1 % goes to the AD.
Returns section:
All types of returns are received in this section. All authorized dealers submit their monthly F.E
return to FEOD. In this section documents with Form-E and Form-I forms are separated. An
initial checking is also made. Documents with E Forms are sent to the Export section and
documents with I Forms are sent to the Import section.
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Export Section
Documents with E Forms are checked and verified in this section. At the front side of the E
form following particulars is checked. 7digit code (this code is allotted by SBP), National Tax
Number, I D card number, Date of issue, Place of issue, Origin of Goods, Name and Address of
AD, Name of Beneficiary
Description of goods, Quantity, Invoice Value, Port of Shipmen, Date of shipment
At the backside of the E Form following particulars are verified.
Coding of transaction by AD/ SBP, Country to which exports are made, Country code,
Commodity , Amount in figure , Amount of words, Quantity , Mode of transportation
Bill of Lading
If the exports are made through the Ship then the shipping company issues a bill of lading. In this
bill, following particulars are verified. Booking number, importer’s name, description of goods.
Invoice
Terms and conditions, buyer, the name of vessel, description of goods, fix code,
Fix code for each commodity in code book (different codes are assigned to chemical, textile,
pharmaceutical and other deptt.)
Letter about discrepancies is issued by SBP to the Ads and they are bound to correct these with
in 2 to 3 days.
I- Form
This form is used in case of imports. For this form 6 digits code is assigned with a prefix.
In this form following particulars are present
Indenter’s name, ITC No, 8 digits coding of commodity, origin of good, I D card number, Date
of issue, Place of issue, Origin of Goods, Name and Address of AD, Name of Beneficiary,
Description of goods, Quantity, Invoice Value, Port of Shipmen, Date of shipment.
At the backside of the E Form following particulars are verified.
Coding of transaction by AD/ SBP, Country to which exports are made, Country code,
Commodity , Amount in figure , Amount of words, Quantity , Mode of transportation.
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Over Due section
In case the export proceeds are not yet realized upto due date then after due date successes are
reported to FEOD on statement V-16 show because notice is issued to the concerned party. Then
if not any response then after 21st days final show cause notice is issued to bring proceeds which
are not clear.
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