Internship Report On State Bank of Pakistan
Internship Report On State Bank of Pakistan
Internship Report On State Bank of Pakistan
Internship Report
Executive Summary.................................................................................................................5
Introduction...........................................................................................................................6
Background..................................................................................................................................................6
Objectives....................................................................................................................................................6
Vision..........................................................................................................................................................6
Mission........................................................................................................................................................7
INTRODUCTION TO BSC (BANKING SERVICE CORPORATION).........................................7
Functions Delegated to SBP (BSC):............................................................................................................8
SPB-BSC Field Offices.............................................................................................................................10
NIBAF:................................................................................................................................11
Functions of NIBAF..................................................................................................................................11
Units in which the interns have been routed..............................................................................13
Deposit Accounts Uni................................................................................................................................13
Prize Bond and Saving Certificate Unit.....................................................................................................15
Internal Audit Unit.....................................................................................................................................18
Foreign Exchange Unit..............................................................................................................................18
Public Accounts Unit.................................................................................................................................22
Administration Unit...................................................................................................................................27
Development Finance Unit........................................................................................................................30
Currency Management Unit......................................................................................................................32
Role of SBP-BSC in Currency Circulation................................................................................36
National bank of Pakistan..........................................................................................................................36
National bank and State bank act of 1956.................................................................................................37
Enhanced Role of Currency Chests...........................................................................................................37
National bank operations on behalf of state bank of Pakistan...................................................................38
Currency Circulation Through NBP Chests:.............................................................................39
Currency circulation process.....................................................................................................................40
Currency circulation from NBP’s main chests to its sub-chests:...............................................................41
Foreign circle chests of Balochistan..........................................................................................................42
Treasury office:..........................................................................................................................................43
Withholding capacity of the chest............................................................................................................43
Process of sending the remittance to the chests:........................................................................................45
Channel used in sending the remittance:...................................................................................................46
Maintaining chest vault in state bank of Pakistan:....................................................................46
Accounting Process..................................................................................................................................46
Types of Accounts.................................................................................................................47
Home note account....................................................................................................................................47
Value account.............................................................................................................................................49
SWOT Analysis....................................................................................................................50
Strengths....................................................................................................................................................50
Weaknesses................................................................................................................................................50
Opportunities............................................................................................................................................51
Threats.......................................................................................................................................................51
Suggestions and Recommendations.........................................................................................53
Conclusion………………………………………………………………………………………………….57
Bibliography.........................................................................................................................56
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Acknowledgment.
First and foremost, we are greatly thankful to Alimighty ALLAH, who gave us strengh to
complete this report. we would like to deeply thank State Bank of Pakistan for giving us
the great opportunity to be the part of its internship program. It gave us lots of precious
and valuable knowledge regarding all the banking functions. We wish to express our
sincere gratitude to Ms. Neelofer Nazir, our internship program supervisor, her
willingness to motivate us, contributed tremendously to our internship program and
conducting the report. Beside, we would like to thank all the supervisors and mentors of
the state bank units, whose great effort and kind teachings gave us the opportunity to take
part and learn about the operations of those units working actively in the bank. Later on
we would like to express our thanks to Mr. Jan Muhammad, the currency management
unit head, Mr. Shehzad Aziz, the unit incharge and last but not the least Mr. Sher Jan and
Miss. Ghazal Nagi, without whose assistance we won’t be able to learn about our specific
unit.
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Acronym
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Executive Summary
As we all know that state bank is the central bank of Pakistan and it controls and
regulates all the commercial banks which operate in Pakistan. It is a monetary body. It
monitors all the commercial banks and maintains and manages the money supply in the
country.
State Bank of Pakistan is the Banker's Bank and it is also the Bank of Government this is
the reason by virtue of which we took our attention towards State Bank for internship .
There is a large no of Units in this bank and each Unit perform separate actions for daily
financial matters thats why one can learn a large number of things in this bank. We were
routeted in several Units of SBP-BSC. The Unit assigned to us on which we had to
prepare report is CMU (Currency Management Unit) in which we had to observe the
specific area of the unit related to Currency circulation through NBP (National Bank of
Pakistan) Chests. This Unit performs many operations regarding currency circulation.
We also discussed on the Strengths, Weaknesses, Opportunities and Threats related to the
SBP-BSC and our specific Unit .We prescribed Some valualbe suggestions to policy
makers of State Bank and in the end we concluded the overall discusion.
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1.Introduction
1.1 Background
State bank of Pakistan is the central bank of Pakistan. It was established in 1948. Initially
State Bank of Pakistan was entrusted with the task to “regulate the issue of bank notes
and keeping of reserves with a view to securing monetary stability in Pakistan and
generally to operate the currency and credit system of the country to its advantage" (SBP
order, 1948).
In financial sector reforms of 1994 State Bank of Pakistan got full autonomy. “On
January 21, 1997 this autonomy was further strengthened when the government issued
three Amendment Ordinances. These changes gave full and exclusive authority to the
State Bank to regulate the banking sector, to conduct an independent monetary policy and
to set limit on government borrowings from the State Bank of Pakistan” (Wikipedia,
2010). Currently its primary functions include regulating banking sector, maintenance of
public accounts, devising monetary policy, management of public debt, issuance of
currency notes, and maintaining inflation.
1.2 Objectives
As we all know that state bank of Pakistan is a non-profit making organization. Its main
objective is to manage or maintain the currency supply in country. Increase and decrease
in money supply can create inflation or deflation in country ,so these things should be
handled immediately and state bank is doing this. The mission and vision of SBP is as
under.
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1.3 Vision
To develop SBP-BSC into a dynamic and efficient organization equipped with requisite
technology and human resource capable of extending sustainable support to the State
Bank of Pakistan in achieving its objectives (SBP website).
1.4 Mission
Banking Services Corporation (BSC) – set up in January 2002, is the subsidiary of the
State Bank of Pakistan and is entrusted with the task of currency management,
operational and administrative oversight of foreign exchange Units, export and other
finance, management of Government accounts and operational work related to
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Government certificates. With the changing environment of banking sector, BSC has
undergone significant change. On one hand BSC has had to relinquish certain functions,
It performed at the time when both interest,credit and foreign exchange was rigorously
regulated. On the other hand, it has to reposition itself to the deregulated environment
(while continuing to perform some old functions such as related to Export Finance
Scheme) and be equipped to deal with a transformed Central Bank and banking system.
The challenges posed by these changing requirements have been phenomenal but BSC
has been steadily shifting its goals and objectives to align it with the new demands. Going
forward, SBP is now working closely with BSC to develop a strategy for its further
transformation to assign a more relevant Mission to it in line with the withdrawal of some
of its old functions, consolidate the organization, fully automate its services and introduce
a new culture of change management along with better enforcement of the performance
management systems. Developing adequate capacity and managerial skills along with
better internal controls will be critical to achieve the anticipated transformation. SBP
(BSC) was established to perform operational work of State Bank of Pakistan (SBP
website). SBP-BSC is subsidiary of State Bank of Pakistan having 16 offices in major
Cities of the country and SBP (BSC) core function and operation area is Currency
Management. SBP (BSC) consists of following Units.
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Banker to the State Bank;
Provide necessary assistance to SBP for indenting of currency notes
Operational work relating to management of public debt (i.e. floatation of loan) &
Foreign exchange.
Banker to the Govt. for the purpose of Revenue collection.
Payments and maintenance of accounts for and on behalf of the federal/
provincial/local Govt. etc… and Business relating to National Savings Scheme
(NSS).
Currency Management i.e. issue, distribution and exchange of bank notes and
coins as well as destruction of soiled bank notes.
Management of country wide clearing houses for settlement of payment
Any other business which the State Bank may specify to perform.
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SPB-BSC Field Offices
Field Offices
N. Nazimabad Office
Multan Office
Chief Manager
Chief Manager
Sukkur Office
Muzaffarabad Office Chief Manager
Chief Manager
Gujrawala Office
Bahawalpur Office Chief Manager
Chief Manager
D.I.Khan Office
Sialkot Office Chief Manager
Chief Manager
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1.6 NIBAF:
The state bank of Pakistan since its inception has played a pioneering role in the sphere of
banking education and training, both for its own staff as for the banking industry in the
country.
NIBAF was established by PBC and was taken over by SBP in 1997. The new complex
of the institute is daily suited for conducting residential training program. In which the
institute is located, specifically for public and private educational. Training institutions by
the government ensures peaceful and serene environment highly congenital for academic
pursuits.
Upcoming event
Business plan
International courses
Certificate courses
Training program material
Requisitions
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Organizational Chart of State Bank of Pakistan
(Banking Service Corporation)
CHIEF MANAGER
Divisional Divisional
head 1 (OG4) Division
head-2 (OG-4) head 3 (OG-
banking issue &
banking 4)
treasury cash
Engineer
i-ng
Exchange Banking RE-Fin. Security Prize Admin Audit division
Issue &
policy Division Division Division Division Bond unit division civil/elec
treasury
Divisio trical
division(c
unit
n
These are the units in which we have been rotated and had the following experiences.
SBP-BSC acts as a banker to the banks. Commercial banks open their accounts with
state bank. 43 commercial bank accounts are maintained in the deposit accounts unit
DAU deals with the current accounts of Commercial Banks.
Handles export refinance scheme.
Deals with Government drafts
Clean Cash: Balances all transactions.
The facility of remittance of government payments is provided through this Unit.
Account reconciliation
Handles Miscellaneous Problems
Also facilitate public remittances and fee is charged for that whereas no fee is charged
from the government.
It is the payment order issued by D.A.U when an employee of one branch of SBP wants
to make payment to the employee of the other branch. Usually no fee is charged for this
operation as SBP uses it to facilitate its employees.
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2.1.1.2 Telegraphic Transfer (T.T)
Telegraphic transfer is used to transfer detail figures of Net transactions to SBP head
office .The detail of all the transactions took place in DAU are summarized the net
balance and report to head office by T.T.
A bank draft is used when general public make payments to government institutes.
If one government institution wants to make payments to the other institute then they
make use of the govt. draft
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2.2 Prize Bond and Saving Certificate unit
The Prize Bond scheme is the part of national saving scheme. The SBP-BSC provides
management services to the government for this scheme. SBP-BSC can decide about the
terms and conditions of the scheme can increase or decrease the amount of prize money
and can change the denomination. Prize bond unit perform the following functions.
Apart from prize bond this unit is involved in the management of defense saving
certificates and special saving certificates. These two instruments are dealt with in the
interest bearing account and the prize in non-interest bearing account of the unit.
Prize bonds are of seven denominations; 100, 200, 750, 1500, 15000, 25000, and
40000.
Prize bond of each denomination has a shut period of 2 months, and is included in
draw after one month of issuance, thus included in 4 draws per year.
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Prize bonds can be issued and en-cashed in all SBP BSC banks, National Savings
Centers and scheduled banks.
High amount winning bond will be send to PSPC (Pakistan Security Printing
Corporation) for
Price (Rs) Working Days further
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2.2.3 The Process of Issuance and Payment of Bond
At the time of bonds issuance it is recorded in "Receipt Register" and at the time
of payment it is recorded in "Payment Register".
Different prices are paid with in different periods.
After the submission of the application form for claiming the prize, the
genuineness of the bond is first checked by the receiving OG-1 officer. Then after
entering it to the GLOBUS it is passed on to OG-2 for further verification and
authentication
The bonds of Rs.25000 and 40000 are proceed in Bonds Unit for which the
original bond, copy of N.I.C of Bond holder with 2 signatures which must be
similar to N.I.C.
There are Two PDOs in Pakistan situated in Karachi and Lahore. Bonds issued in
Quetta are confirmed by PDO Karachi.
Later-on, the Bond Unit will issue a token for the payment, which is recorded in
Transit Book.
State Bank never pays directly to claimant. He will be paid by commercial bank
It involves in-depth and independent examination of cases in the light of rules and
regulations to minimize the risk.
Pre audit the cases and vouchers received from various units under SBP
expenditure regulation, budgetary limit and head of accounts.
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Export Refinance Cases before making payment to banks
Pay periodical surprise visits on timely basis (i.e. weekly, fortnightly, monthly,
quarterly etc.) to see various operations and activities of Units/Departments.
Pre-audit of staff loans (like HBA, temporary advance against GPF balance etc.)
The operational matters relating to Foreign Exchange are handled by the Foreign
Exchange Unit (FEU) of SBP Banking Services Corporation (BSC). The operations are
as follow.
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Outward remittances to foreign consultants, advance payments against import of
raw materials and spare parts.
Cases related to frustrated cargo and re-import of exported goods with the purpose
to re-export are also dealt by the FEU.
The export form is that form which is used to export any goods out of the country. This
form is given to the exporter and to be filled by person. The form has the following
important contents.
Name of the exporter
NIC of the exporter
Kinds of goods which the person wants to export
Country to which the goods are to be exported
The currency in which the business transactions is done
Invoice of the goods
The total value of goods
Custom clearance
Mean of transport
The import form used and is filled by the importer, whenever he wants to import any
goods from outside of the country. The import form is given to him and has to be filled
and submitted in a bank where the importer has a maintaining account. Import form has
the following essential contents.
Name of importer
NIC of the importer
Type of goods which are to be imported
The country from which the goods are imported
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Invoice of the goods from the importer country
The currency in which the business is completed
Mean of transport
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2.5 Public Accounts Unit
Under Section 21 of the State Bank of Pakistan Act 1956, the SBP has been entrusted to
perform banking services on behalf of the federal and provincial governments and also to
carry out their exchange, remittance and other banking operations including the
management of public debt.
The banking services provided by SBP-BSC to the federal, provincial and local
governments Includes following services.
Cheque Cheque
Local governments
Zakat accounts.
Defense A/C
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BSC provides following banking services to the government through its field offices:
Public Account Unit deals with Government Departments. Every department before
initiating its operations opens an account in SBP for its financial maters. PAU runs
operations of Government Receipts and Payments through clearing, transfer or cash .
2.5.1.1 Payments
After verification and payment of the cheuqes by PAU it will be send back to the
departments.
The payments up-to Rs.5000 paid by TO (Treasury officer) and above Rs.5000
will be verified by PAU.
PAU also pays prize bonds. Up-to Rs.18000 paid in cash and above Rs.18000 will
be deposit in their accounts.
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2.5.1.2 Types of Accounts
There are three types of accounts that public account unit maintain.
The State Bank of Pakistan has the right to dishonor the cheque without the
endorsement.
The cheque drawn on this account has validity of one month from issuing date
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Hierarchal Chart of PAU
Payment over the counter means the payment of the required amount in cash in SBP-
BSC. The procedure for over the counter payment is given as follows.
The cheque issued for encashment must be drawn by Drawing and Disbursing
Officer (DDO) of the concerned department.
The DDO may authorize a person for collection of payment.
The signature of DDO, the name and picture of the person to whom DDO has
authorized must be recorded with SBP.
The Cheque must be endorsed by DDO from the back side of the Cheque with a
stamp of Cash received.
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The Schedule must contain:
Only the complete and satisfied transactions are recorded in Transit Book
After recording the book is sent to the cash counter with a messenger, where the
payment is made.
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NIFT provide settlement advice to commercial banks and net settlement position
to BSC for debit and credit of concerned bank accounts.
Same procedure is adopted for government payments; NIFT collects cheques of
Government accounts from presenting banks and send them to BSC for
settlement.
At the end of the day the cash counter sends all instruments e.g. cheques to PAU
for matching.
A Summary of payments is prepared
A voucher is made with the debited amount of cash payments to the relevant
accounts.
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Making business plans, preparation of annual budget.
In SBP-BSC basic pay and other allowances are not maintained separately like
other Government institutions. Here in SBP-BSC they maintain Net monetize
base salary which is sum-up of basic salary and all allowances
The GPF (General Prevalent Fund) and GTA ( Group Terms Assurance) under
which the employ is insured by any insurance company in case of any unfortunate
accident.
Under Benevolent fund deducts 5% which will be paid for marriages of children
or in case of death given to recommended person by the employ.
Income tax deduction done on Net salary amount of the year starts from Rs. 300,
00. Different ratios for different Net amounts of salary.
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Medical section provides medical facilities to the employees of state bank.
Different hospitals have agreement with SBP-BSC to provide health facilities to
the employs, their wives and children.
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2.7 Development Finance Unit
Commercial banks acts as an intermediary between exporter and the SBP and
charges 1% of the interest as its commission whereas the rest goes with the SBP.
The loan is usually granted for 180 days. After 180 days the SBP credits the
account of that commercial bank and notifies it about that (regardless the payment
made or not).
If the exporter pays before 180 days, then that bank is liable to pay to SBP within
72 hours.
Any exporter can avail the Export Finance Facility through any of commercial
bank, after fulfilling collateral requirements of the bank.
The decision to lend shall be taken by the bank under its own internally approved
credit policy.
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2.7.2 FINANCING METHODS
Purchase order
Agreement
Demand Promissory Note (D.P note)
In this after 180 days of loan 30 days are given to exporter to submit their shipment
documents to commercial bank.
Bank is given 7 days after those 30 days to give those documents to SBP. If not then the
bank is charged with fine of 42 paisa per thousand per day.
The financing facility can be availed at pre shipment stage for procuring inputs
and manufacturing the goods to be exported.
Financing at Post Shipment stage is also granted against goods already shipped to
the importer abroad, for the period up-to realization of export proceeds or 180
days, whichever is earlier.
Exporters having availed Part-II facilities have to export / ship eligible goods and
realize export proceeds and submit the evidence of performance on the prescribed
statement within two months from close of each financial year.
Currency Management Unit CMU is the unit where all functions related to currency
management handled. In this unit we learned following.
At places where the cash business is not conducted by the bank the treasury officer is
responsible to keep sufficient fund at district treasury or sub treasury
Pre requisite of currency chest
Existence of a standard and spacious strong room
Arrangements for security and police guards
Feeding arrangements with safe movements
Posting of trained staff to handle the work
Means of communications for prompt reporting of government receipt and
payment
Cash remittances
Kinds of cash remittance
Outward inward
Cash remittances are sent to other field offices, NBP chests and govt. sub treasuries
locating in the region.
On approval of the currency officer packing of cash and escort arrangements are carried
out and the receiving chest is informed in advance in coded form
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2.8.1.5 Examination of quarterly cash verification reports of NBP chests.
NBP regional authorities nominates well conversant officers for examining the chest
balances and other valuable documents viz. bland bank draft, govt draft and code books
etc.
On receipt of the from NBP authorities the same are examined at this office and
irregularities if found therein are communicated for rectifications
In terms of federal treasury rules and agreement between SBP and NBP
NBP is responsible for safe custody of currency balances in properly strong rooms
according to their holding capacity
SBP is allowed to access the chests for inspecting the contents arrangements for
safe custody of the balances, code books and draft forms
This office has an annual plan to inspect chests continuously on yearly basis.
As all information about remittances is highly confidential, so codes are used in letters
/telegrams related to the remittance, which is translated by using cypher code book.
The core functions to,
Issue and distribute fresh notes and coins
Withdraw soiled notes from circulation and destruction thereof
provide exchange facility
Disseminate ant counter forge measures
Maintain books of accounts in such a manner to provide reliable and timely
financial information to internal and external stakeholders and
To oversee the operations of NBP Chests
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3. Role of SBP-BSC in Currency Circulation
Both the SBP and the BSC has a vital role in the currency circulation in the country
through its chests. Following are the roles of SBP in currency circulation
Considering the request of TO ( treasury officer) to establish a chest in any area,
To give authority to the chest to operate in that circle.
To monitor the chest whether it’s functioning properly and accordingly to the
rules and regulations of the SBP.
Currency management to ensure adequate supply of good quality notes and coins
across the country
Banking services to federal, provincial and district government, departments,
commercial banks and SBP
financial policies for developing an inclusive financial system
National Bank of Pakistan is one of the largest commercial bank operating in Pakistan. It
has redefined its role and has moved from a public sector organization into a modern
commercial bank. The Bank's services are available to individuals, corporate entities and
government. While it continues to act as
trustee of public funds and as the agent to
the State Bank of Pakistan (in places where
SBP does not have presence).
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According to the State Bank Act of 1956, “The amount of currency and the bank notes in
circulation, which constitute the liability of the issue department shouldn’t exceed assed
of that department held in gold, coins, and sterling securities”
The bank shall have sole right to issue bank notes made payable to bearer on demand in
Pakistan accordance with the provision hereinafter made.
In this act, an agreement was signed between the State bank of Pakistan and national
bank of Pakistan which included that “The national bank of Pakistan will serve the Govt.
Employees on behalf of the state bank of Pakistan”.
SBP has only 16 field’s offices in whole country. Therefore, in order to serve government
and public, there was a necessity of an agent who works instead of them in remote areas
where no office of State Bank of Pakistan exists. Each chest report to its respective issue
circles i.e. four issue circle set at SBP BSC Karachi, Lahore, Quetta and Peshawar.
Being the Agent of SBP, the national bank of Pakistan established its chests and sub-
chests across the cities and areas in the country. National Bank of Pakistan (NBP) has
been engaged through an agency agreement signed by Finance Department, SBP with
NBP to work as agent for assisting government departments using a wide network of its
1,243 branches in withdrawal/ deposit of cash and facilitating other banking transactions
pertaining to Government collections / payments etc…
The network of currency chests maintained by National Bank of Pakistan (NBP) and by
the Government treasuries plays a key role in carrying out currency management function
in an effective manner. The stock of bank notes and coins held by the currency chests is
also taken into account for working out the cash reserve requirements of BSC concerned.
The chest/ sub-chests maintained with NBP branches are authorized to accept claim notes
from commercial banks and deposit them with BSC field offices under whose jurisdiction
they fall.
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With a view to minimize the expenditure on frequent dispatch on remittance, the holding
capacity of NBP chests / sub-chests have been enhanced, in addition to setting up of more
chests at different locations across the country, ensuring the supply of bank notes both
new and re-issuable with ease and less time. Detailed information about the chests / sub-
chests is available in the Annexure of this report.
Following are the operations conducted by the national bank of Pakistan on behalf of
state bank. Which are;
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The collection of all Government taxes including FBR Tax Revenues at far areas
of various districts of Balochistan remained a vital area for NBP on behalf of BSC
during the period under review. Implementation of FBR Module at all BSC
offices enabled the offices to credit the relevant accounts and report the tax
revenue collected by them and NBP branches to FBR on daily basis through on
line system.
Pursuant to the powers vested in the BSC Ordinance 2001, the BSC through its 16
field offices and scheduled banks has been playing a pivotal role in savings
mobilization by managing sale/ encashment/profit payment of certificates in
respect of following schemes of the Central Directorate of National Savings
(CDNS), Government of Pakistan:
There are 33 NBP chests actively running in Balochistan. The main chests of NBP are
feeded by the Quetta BSC issue office and the sub-chests are supported by the main
chests of NBP. The currency is circulated from BSC to NBB chests and the sub-chests
are then replenished through the NBP main chest located in that district.
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2.8.4.1 Currency circulation process
The Quetta SBP-BSC is the main currency issuer office, which is responsible to feed the
following NBP main chests in the province, after receiving the request of remittance from
them.
1. Dhadar
2. Dera Allah Yar
3. Murad jamali
4. Khuzdar
5. Loralai
6. Sibi
7. Mastung
8. Nuskhki
9. Zhob
10. Ziarath
11. Kharan
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12. Dalbandin
13. Chamman
14. Muslim bagh
The sub-chests of the national bank of Pakistan are restocked from their key chests
without receiving remittance straight from the BSC Quetta. Following are the sub-
chests of the main NBP chests operating in different areas of the province.
The above mentioned sub-chests are given instructions to send the indent, requesting for the
remittance, to the BSC Quetta office instead of notifying their main NBP branch. Later on, BSC
Quetta, after considering the indent will give instructions to the main chest of that specific area
to send the currency to its sub branch.
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Several of Baluchistan’s BSC chests are replenished by the Karachi BSC office on the
appeal of Quetta BSC issue branch. The purpose of this feeding is due to the existence of
the long distance in-between the Quetta BSC and the chest, which needs to be
replenished in the required time. Therefore, Karachi BSC is requested to consider on the
indent sent by one of the Balochistan foreign circle chest.
Following are some of the foreign circle chests located in Balochistan. However, they are
stocked up by the Karachi BSC office.
Treasury office:
There is only one treasury office operating in Balochistan province which is located in
langasht. It works as an agent on behalf of the state bank of Pakistan operations since
there is no NBP present in that region.
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4.3 Withholding capacity of the chest
Each NBP chest is given ordered to hold a specific amount of currency capacity in their
vaults, keeping in view the number of the government employees working in that area
and the Government pension takers living there.
The larger the number of government employees working and government pension takers
living there, the more will be the withholding capacity of that specific chest. For
example: The main NBP chest of Dera.A.Yaar’s withholding capacity is 300 million
rupees whereas the Sorab main chest has withholding capacity of 100 million.
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S.no Name of Whether Holding Name of Whether Holding Name of Whether Ho
Treasury sub chest or Capacity Treasury Chest or Capacity Treasury sub Chest or Ca
treasury and Sub chest Rs in sub Sub- Rs in treasury and Sub- Rs
Chest M
NBP Branches Million treasury Chest Million NBP
Replenished By and NBP Branches
Quetta Office Branches Replenished
Replenishe By Karachi
d By NBP Office
Branches
1. NBP Sibi Chest & 100 NBP Musa Chest 40 NBP Turbat Chest 20
SCD Khail
2. NBP Lorlai Chest 300 NBP Dukki Chest 50 NBP Gawadar Do 30
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14. NBP Dalbandin Sub Chest 150
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On the other hand, if the capacity of any chest or sub-chests of the NBP is depleted to
40% of their withholding capacity. They are given instructions to notify the BSC Quetta
office, which will in return send the remittance to those chests.
Subsequently, if the withholding capacity of any chest increases from its required volume
of currency, the BSC Quetta after analyzing its financial data, will give order to the NBP(
exceed currency chest) to send the surplus amount of currency from their capacity to any
of the sub-chest located near to it.
The process of sending the remittance to the NBP chests else wise from NBP main chests
to its sub-chests is done in the following ways:
Any chests, whose withholding capacity reaches to 40% of its total capacity
should notify the BSC Quetta branch by sending the indent to BSC Quetta branch.
The BSC Quetta branch once receives the indent, will examine the financial data
of that specific chest. Which also include: which domain currency is needed and
in how much quantity.
Later on, the BSC Quetta requests that particular chest to send the Annexure
letter. The Annexure is the letter in which the following things are mentioned
a) Name of the chest which needs the remittance
b) Location of that chest
c) Capacity/ oblique required
d) Number of requests which were requested before
The annexure is then signed by the ACM(cash),
The final authority is of the currency officer, who, after signing the annexure, the
remittance is sent to that chest.
The chest can be replenished by both the new notes taken out from the Stock vault
as well as from the re-issuable notes.
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4.4.1 Transport Channel used in sending the remittance
Although there are many mean of transport in the country in the shape of railways, by air,
and by road but the SBP-BSC have chosen the Pakistan railway as their mean of transport
of sending the remittance to their chests.
The reason behind selecting this transport channel is because, SBP prefers to use the
government sector channels, which is the Pakistan railways. Similarly, for the security of
the remittance the Pakistan police officers are hired to accompany the transport of the
remittances to its destination, even though the private security agencies are present in the
city and are ready to be hired and provide the services.
The transactions occurring in each Currency Chest are reported to SBP on daily basis
through Currency Chest Slips (A-17) also called as TE-2 form. These transactions are the
deposits and withdrawal from chest which are recorded and accounted for in the Globus
system. The total amount of Deposits and Withdrawals from all chests and their net
difference are also reported to SBP in a summarized form on a statement called F-157.
Accounting entries on daily basis are done in Globus for the total deposits, withdrawals,
net difference (Dr./Cr.) and for Coins issued or received in chests. Further, accounting
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entries are also made for the remittances dispatched/received from all the chests in
Balochistan.
Transactions reported by each chest through currency chest slip are recorded in the
subsidiary register of chest called A-17 book. It contains the details about currency
denomination wise. It has a separate record of each type of note issued by SBP and
aggregate balances are extracted. These balances are further utilized to prepare the home
note ledger account.
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F-157 statement.
This statement is sent by the NBP main branch Quetta. SBP Quetta daily receives this
statement. It contains the aggregate amount of receipt and withdrawals of each chest and
their net balances. This statement is then used to make A-10
A-10
It is the chest balance book. It is prepared on the monthly basis. Each chest ending
balances are recorded on it
A-12
It is the balance reconciliation book. It is prepared to verify the balances.
A-8
It is home note ledger account. It consists of main accounts, currency account is head of
accounts, it must have credit balance, and the other 6 main ledger accounts are
A. Transfer account
B. Cancelled note account
C. Exchange note account
D. Chest account
E. Circulation account
F. Invoiced account
A-14
It is prepared to report Karachi SBP about the transactions of chests
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4.6.1.2 Value account
Value account is as “Asset” account and is shown under Assets in SBP’s Balance Sheet.
This account hits the circulation. We also record all type of coin transactions in Value A/c
like:
a) Coins transferred from reserve to exchange
b) Coins transferred from exchange to reserve
c) Remittances of coins sent to chest
d) Remittances of coins received from chest
e) Remittances received from mint Lahore
f) Remittance sent by SBP Karachi to SBP Quetta chests
g) Net T.T effect
h) Remittances sent by SBP Quetta chest so SBP Karachi.
Difficulty in finding the data related to our topic because the topic which was
assigned to us was not broad enough.
There were not sufficient PC's available in order to prepare the report
No internet facility
late reporting of currency chest slips, the amounts charged in that mean time
are Rs.20,000 for non-reporting and Rs.1000 per day as it delays sending the
slip.
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5. SWOT Analysis
5 .1 Strengths
Employees of SBP-BSC enjoy good salary packages and benefits. For example interest
free loans are given for building house and buying car etc. employees feel secure because
of the permanent nature of job. Therefore young and talented candidates opt for SBP-
BSC posts. Senior employees enjoy more benefits in the form of recognition and other
fringe benefits which work to retain them.
5.2 Weaknesses
Unlike most of the Central Banks of other countries SBP-BSC is not updated in
technology. They are using old Pentium processor computers and CRT monitors. The
GLOBUS software used is not updated. Computers and GLOBUS software was
introduced in 2003 and they are in the same form, not updated. This causes system
freezes and hang ups and hence time wastage.
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5.2.2 Over strictness
The strictness is a tool of discipline but the over strictness may convert into mental stress
for the employees of state bank.
SBP-BSC employees in general and imputers should be trained at least for improving
their typing speed. It will speed up the payment process and entry system.
In many units of SBP-BSC lack of staff caused over burden of work on employees
working in that particular unit. Due to the unavailability of backup staff, when an
employee is not present in that unit, all the work for which he is responsible is not
operating. Therefore, The unit may face trouble in flow of work.
5.3 Opportunities
5.3.1 Investment in IT and latest technology
There is a great opportunity for SBP-BSC to invest in latest technology. By replacing the
present system of physical movement of cheque for clearance with image based clearance
system like Cheque Truncation System (CTS) SBP can enable commercial banks to offer
new products and services. It could be a source of earning for SBP and would also help
achieve its goal of providing a facilitating financial market.
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5.4 Threats
5.4.1 Political instability and pressure can harm the operations of SBP
Frequently changing governments and their policies harm the functionality and
consistency of SBP-BSC policies.
Excessive borrowings of the present government is making difficult for SBP to maintain
foreign exchange reserves.
A huge amount of fake currency is floating in the market which is causing inflation in the
economy and is devaluing rupee. Fake money makers have improved the quality of their
fake notes and it is hard for general public to distinguish them from original currency
notes.
It was observed that the major bottleneck in payment system is the physical movement of
the instrument. The circulation of money is one of the major function of SBP-BSC is
operated by CMU through NBP chests. The existing system of flow of work is well
organized but it should be more efficient and more effective to compete other central
banks of the world. We have some suggestions which may assist the policy makers of
state bank.
The monitoring can be increased by using the biometric devices like thumb impression
for the record of entry and leaving time of the employees instead using the older register
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method which only marks attendance and no time and hence puts no check on the entry
and exit of the employees in the organization.
The communication gap between the lower grade employees and higher ranked officers
of SBPBSC should be reduced to make sure that the employees can communicate their
problems as well as suggestions about ongoing policies more easily, to the higher
authorities.
Periodic meetings should be conducted with employees to get more and more feedback
about the current processes and procedures and also to make necessary improvements if
any.
The overburden of work on the existing staff seems to be an obstacle in the flow of work.
The SBP should hire new staff and make sure the availability of backup staff in.
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Conclusion
State bank of Pakistan provides a large number of services. In public account department they receive cash
or checque and also make payments on the behalf of government and they also clear checques. In DFU unit
they provide export financing money to exporters. In prize bond department they provide prize bonds and
also conduct draws on the behalf of govt. DAU deals with commercial banks whereas The CMU deals with
the management of currency and this is the unit which plays key role in the circulation of money through
NBP chests.
The NBP plays vital role in circulation of money. There are 33 chests operating in the Balochistan and one
treasury office. In case where there is no NBP chest, The Treasury office works as agent on behalf of SBP.
The roles of these chests are to deal with the circulation of currency in the province.
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Bibliography
www.sbo.org.pk
www.wikipedia.com
Financial Magazine
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