State Bank of Pakistan Internship Report

STATE BANK OF PAKISTAN (BSC) FAISALABAD
STATE BANK OF PAKISTAN BANKING SERVICES CORPORATION

(BANK) FAISALABAD

INTERNSHIP REPORT 2013
Submitted to:
Mr. SAJJAD ALI SHAH
Chief Manager State Bank of Pakistan
BSC (Bank) Faisalabad
Submitted by:
Mr. Faisal Mahmood Tahir
(Roll No. F-10810)

National University of Modern Languages (NUML) Islamabad
Faisalabad Campus


Preface

nternship is an integral part of our degree (MBA or M.Com). For the sake
of internship the most initial thing is to have a practical experience. This
effort may lead a student to get a practical experience if right organization is
selected. During the internship, a student comes to practical knowledge. He/she
learns what he has studied so far. As a MBA student I have also done my
internship at SBP-BSC Faisalabad. Here I come to know a different and very
interesting experience of learning and working with people. First of all I will
tell you about Bank then operations of different department.

I

Acknowledgement

To Him belongs the dimension of the Heavens and the
earth, it is He who gives Life and death and He has
power over all things. (Al-Quran)
In the first week of my internship I was bit confuse because it was my first
experience to be there at workplace. At workplace there were very nice personnel
who helped me time and again for proceeding. I am highly indebted to my
instructor Mr. Muhammad Rehan who always helped me whenever I got
confused. He is full of God gifted qualities, he has been there to guide me during
my internship span of six weeks. I am also thankful to Mr. Naeem-ul-Hassan,
Miss Naila Iram, Mr. Muhammad Rafique and all other employees of SBP-
BSC Faisalabad who remained supportive and cooperative during the work. They
also helped me from the formative stages to the completion of this internship
report.
And how can I forget my honorable and beloved Sir Kashif and Sir Shakil
who made me able to perform this task. And boost my morale at every time when
I have disappointed and lost my hope. I am very thankful from the core of heart
to both Sir Kashif and Sir Shakeel.
My friends like Mr. Whaab, Mr. Israr, and Mr. Rehan and other friends also
provided me guide lines for preparing this report I would like to say thanks to
all these. May Allah bless them all and succeed them in every field of life.

Dedication

I dedicate this stuff to my beloved and supporting parents and caring brothers and
sisters. A special feeling of gratitude is dedicated to my loving parents for their
endless love, support and encouragement.
I dedicate this work and give special thanks to my coordinator Mr. Muhammad
Rehan for being there for me throughout the entire internship program.


Sr. No.

Title

1.
Executive summary

2.

Introduction

3.

Structure of SBP BSC FSD

4.

Refinance schemes unit

5.

Currency management unit

6.

On-site verification

7.

Prize bond unit

8.

Public accounts unit

9.

Foreign exchange operations department

10.

Foreign exchange adjudication department

11.
Access to finance unit

12.

Deposit account unit


Executive Summary

I choose the state bank of Pakistan BSC Faisalabad for my internship. As we all know that
state bank is the central bank of Pakistan and it controls 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.
The reason why I choose this bank is because it is the central bank and the biggest bank in
Pakistan. There is a large number of departments in this bank and one can learn a large number
of things in this bank. There are many departments in this bank but the departments in which
we were trained are public account unit, deposit account unit, currency management unit, prize
bond unit, export refinance unit, foreign exchange operation division, foreign exchange
adjudication unit, access to finance unit, onsite inspection unit, public account unit perform
many operations. It collects and gives payments on behalf of government. It also performs
clearing. It receives cheques or send cheques to NIFT for clearing purpose. Prize bond
department issues prize bond to general public. It controls the overall system of prize bond and
prizes. I have learned a large number of things from state bank of Pakistan Faisalabad. It
provides all facilities to general public which it can to help or facilitate them.
At the end of report some recommendations are also given based on my observation and study
of system of SBP-BSC Faisalabad.


Introduction
SBP is the central bank of the country since September 1948.The bank carries out its
functions under the powers derived from SBP Act, 1956. Which has respective from
October 1948.
There are many functions which are performed by the SBP.
Provide the facility of saving and investment.
Provision of training facility to bankers.
Availability of credit to priority sector.
Playing an active role in the application of Islamic banking.
Regulate the issue of bank notes.
Keeping reserves.
Banker to the banks.
Responsibility to utilize the reserves of the country in productive way.
Policy making.
Monetary authority of the commercial banks.
Providing the traditional and development functions to achieve goals.
Lender of last resort.
Supervision of financial system.
Managing the public debt and foreign exchange.

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 and operational and
administrative oversight of foreign exchange departments, export and other finance,
management of Government accounts and operational work related to 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 and 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.
Vision
Our vision is to develop the SBP BSC (Bank) into a strong and dynamic institution, equipped
with an efficient and professional human resource base, having the requisite technology and
fully capable of providing quality service to stakeholders, while complementing the State Bank
of Pakistan in achieving its objectives.
Mission
To provide reliable banking services to Government, Financial institutions, public and to act
as an operational arm of State Bank of Pakistan.
Core Functions of SBP BSC
1. Currency management.
2. Banking services.
3. Foreign exchange.
4. Finance policies.
5. Public debts management.
6. Implementation of SBPs finance policies.
7. SBP development.
8. Open market operations.


Hierarchy of SBP BSC

Chief Manager
(C.M)
Deputy Chief Manager
(DCM)
Assistant Chief Manager
(ACM)
OG-2
OG-1

Departments of SBP- BSC FSD

1
Refinance scheme unit
2
Currency management unit
3
Onsite verification
4
Prize bond unit
5
Public accounts unit
6
Foreign exchange operations division
7
Foreign exchange adjudication department
8
9
Deposit accounts unit

Refinance Schemes Unit
Overview
Exports play an important role in economic growth & development of a country. The export
finance scheme (EFS) was introduced in 1973 with the objective to boost up exporters by
providing Short term financing facilities to exporters through banks at concessional rates, for
exports of manufacturing goods specially value added products (polished rice, gloves,
fabrics, garments etc.) with the exception of basic & primary commodities/raw material as
mentioned in negative list. It operates in two parts via part- l (transaction based) & part-ll
(performance based).State Bank of Pakistan (SBP) has been encouraging exports through its
various schemes, with the objective to make funds available to meet the short and long term
financing needs of the export oriented industries. Besides, schemes have also been launched
by SBP for Agriculture sector as well as for flood and war affected areas of Pakistan. The
schemes which are currently functional include
Long Term Financing Facility (LTFF).
Islamic Export Refinance Scheme (IERS).
Refinancing Facility for Modernization of SMEs.
Financing Facility for Storage of Agricultural Produce.
Export Finance Scheme (EFS) Part-I & Part-II.

1. Long term financing scheme (LTFF)
Long term financing facility loan is available for imports of machinery (locally
manufactured and imported). And this is granted for 3, 5, and then get up to 10 years.
Grace period up to 2 years for these loans. The basic purpose for granting this loan is
to boost up the exports by producing value added products through this imported
machinery.


2. Islamic export refinance scheme (IERS)
In case of conventional banks interest rate is set by IH and SME finance department
of State Bank of Pakistan. But in case of Islamic banking refinance, interest rate is
different for each month that is set by the head office of that bank keeping in mind
their fixed assets and as it is acceptable for SBP BSC, Refinance unit. Interest rate is
also different from one Islamic bank to another.
3. Refinancing Facility for Modernization of SME

It was introduced to encourage the sponsors of SMEs to modernize their mills/units to
produce quality products.

4. Financing Facility for Storage of Agricultural Produce

This scheme was introduced to encourage Private Sector to establish Silos,
Warehouses and Cold Storages to store agricultural produce.

Functions of refinance schemes unit
Grant seat+ EE1 (loan granted)
Repayment (with markup rate)
Scrutiny of shipment documents/fine/refund
EF1
Miscellaneous work.
Markup rate
Currently, markup rate under EFS for the exporters stands at 9.4 % (in which 8.4% is the
share of State Bank of Pakistan and 1% spread is for Commercial Banks).


Structure

EFS Part-l
Part-l is a transaction based facility. The commercial banks provide export finance to the
exporters on case- to-case basis at pre-shipment/or post shipment stage against firm export
order/contract/LCs. The tenor of the facility is up to 180 days.
Direct exporter
o Under part-l of the scheme is available to direct exports to the extent of 100%
of the value a firm order/contract /LC at pre-shipment stage against eligible
goods.
Indirect exporter
o Who supply inputs i.e. material & goods to direct exporter to be used for to be
exported, are also eligible to avail finance from banks under the scheme at
pre-shipment stage.

Refinance
Scheme unit
Part-1
Pre-
shipment
Post-
shipment
Part- II

Schemes of part-l
1).Pre-shipment in which loan is taken before shipment & simply made contract & the
exporter tells the bank & then bank provide the finance/loan. After getting loan exporter has
to deliver shipment in 180 days. In case of late shipment fine will be charged. 30 days are
provided to exporter to submit documents/shipment proofs to commercial banks &7 days are
provided to commercial banks to submit these documents to SBP-BSC.
Required documents
The documents required to be submitted by the Direct /Indirect Exporters to the bank
concerned are as under:
D-P note
Form-D
Application (request)
Annexure D
EPRC (export proceeds realization certificate)
2). Post shipment is that in which after shipment loan is required. In 210 days after
shipment exporter has to realize export proceeds. If he fails to do so then the fine will be
charged. When amount is realized then amount will be submitted to SBP-BSC within three
working days.
Required document
D-Form
Demand Promissory Note
Export procedure realization certificate (EPRC)
Invoice
Date of shipment

Operations of the Scheme under PartI
Finance from banks under PartI of the Scheme is available to Direct Exporters to
the extent of 100% of the value of a firm export order / contract / letter of credit
against eligible goods.
Indirect Exporters who supply inputs to a Direct Exporter are also eligible to avail
finance from banks under the Scheme at preshipment stage
The Direct or Indirect Exporter shall approach his bank for availing facilities
under EFS indicating his financial needs.
After giving finance to exporters the commercial banks make an application to the
SBP-BSC to indicate the particulars of exporter against which they intend to get
refinance as per Form D. Each request for reimbursement for refinance will be
accompanied by a Demand promissory note that is executed by exporter in favor
of bank and then endorsed to SBP-BSC.
The total amount of financing to both Direct and Indirect exporters shall not
exceed the total amount of the firm export order / contract or letter of credit.
The concerned office of the SBP BSC will grant refinance to the banker of the
Direct Exporter or Indirect Exporter, as the case may be, and release the amount
accordingly within 48 hours on receipt of the refinance claim as per Form D
and D.P Note executed by the exporter.
The scrutiny of documents to be submitted by exporter will be done by the bank
concerned.


EFS Part-ll
Part-ll is a performance based facility. This type of loan is provided to the exporter
throughout the year. After expiry of the year exporter has to give the performance details
In part-2 , include two statements such as
A. EF-1 statement
In this statement SBP-BSC compares with the exporters last year borrowing with his
performance.it includes the shipments which were used only in part II loans. The
performance of the exporter has to 2 times of the loan that he has availed.
B. EE-1 statement
In this statement SBP-BSC makes the exporters limit for next year.it is made from
the starting of the year. It includes both part-I and part-II shipments. The finance limit
is equal to the 50% of the exporters earning through export of eligible goods in the
preceding financial year.
Types of limits
There are two types of limit:
Direct liability is the limit which is formed for ADs by Head office.
Indirect Liability is the exporter limit which is formed by SBP-BSC through EE1
statement submitted by exporters through banks.

Difference b/w EF-1& EE-1 statement

EF statement only used in part-2 shipment.
EE-1Statement is used part-1 or as well as part-2 statement. Thats why in EE-1
Statement the amount is greater than the EF statement.

Required documents for Loan disbursement Procedure in part-1
DP Note (demand promissory note)
Form D (all detail & information about the exporter and bank
Overdue certificate (detail about EE-1 & export overdue
Request letter from party (detail about new or old scheme)
Required documents for Loan disbursement Procedure in part-2
DP Note (demand promissory note)
Request letter
Form EB (only place or amount is mentioned)
Schedule to form EB
Form DE-3
UT-DE II
Rollover scheme
Exporters availing financing facilities under PartII of the scheme shall continue to submit
EF1 statement duly verified by the respective offices of FEOD, SBPBSC within two
months from the completion of the financial year, as at present. However, while applying for
rollover of loans under Part II after completion of the initial 180 days or at an earlier date,
exporters shall be required to submit a statement showing details of shipments of eligible
goods [as per Form EP ] to the extent of 70% of the refinance already availed against which
roll over is being sought. SBPBSC shall not allow the rollover facility unless shipments to
the extent of 70% of refinance availed is established.


Calculations for rollover
1. Average of loans from 1
st
July 1, by adding minimum and maximum loan grant
divide by 2
2. Performance / average*100
3. This average should be minimum 70% for rollover granting loans.
Eligible Goods & Services under the Scheme
All major value added commodities exported from Pakistan.
Software development, web hosting and website services, Medical/ Legal/ Insurance
and other transpiration services, Medical billing, data entry, back office processing,
engineering services and design, Network consulting, remote education, Animation,
Finance and accounting services, customer relationship services and customer
interaction etc.
Consultancy services of various sectors of economy where foreign earning is remitted
into Pakistan. Such sectors include medical, pharmaceutical, engineering,
accountancy, management, financial services, wholesale distribution and retail trade,
transportation, storage and communication, telecommunication services, educational
services and real estate consultancy services.
EFS facility can be availed for the exports of Gold Jewelry.
Local supplies against international tenders.
Supplies to Export Processing Zones.


Linkage of Overdue Export Proceeds with EFS
To streamline the procedure for availing financing under EFS, a condition of
maximum overdue exports proceeds as 5% of last year exports has been laid down for
the exporters. Accordingly, if overdue export position of an exporter is greater than
5% of the previous years exports shown in EE1 statements, the exporter would not
be entitled to avail the EFS facility till such time that the overdue position is reduced
to the 5% benchmark level.
Each exporter is required to give a Certificate on a prescribed Form showing
consolidated position of overdue export bills outstanding against all bank(s).
If an exporter becomes eligible for EFS by repatriating the proceeds to the level of
5% benchmark in the intervening period prescribed for submission of certificate, he
would be allowed to submit a request along with a new certificate for availing the
EFS facility.
Any misreporting/misstatement shall attract imposition of fine on bank/exporter at the
rate prescribed under the Scheme.


Types of penalties

Penalties being charged under the Schemes on account of Various
Irregularities
Various Fines are charged under EFS to both borrower and bank on account of different kinds of
irregularities at rates given below:

Fines under EFS part I
In case of Non-shipment the fine will be charged Paisa 37 per day per Rs.1000 or
part thereof.
Calculated as:
Non shipment fine = amount of loan*.37*no. of days/1000
Types of Fines
Non-shipment
Short/Delayed shipment
Late/less repayment
Late submisiion of shipping documents
Non-submission of EPRC
Mistake /misreporting in EPRC
Wrong information/misreporting
Irregular shipments
Non-performance
Any defaulter by banks/exporter
Exsess availment of loan

In case of Short/delayed shipment the fine will be charged as Paisa 28 per day per
Rs.1000 or part thereof.
Calculated as:
Short/delayed Shipment = amount of loan*.28*no. of delayed days/1000
For the case of Late/less repayment the fine will be Paisa 42 per day per Rs.1000
or part thereof.
Calculated as:
Late/less repayment = less paid amount*.42*no. of days in late repayment/1000
For the late submission of shipping documents there will be fine of Rs.2000 for the
default and Rs.100 per day for each day of default.
Fine for wrong information and incorrect reporting / entry in any Statement
required to be furnished to State Bank of Pakistan will be Rs. 100/ per such wrong
/incorrect reported entry.
Fine for nonsubmission of EPRC by bank within prescribed period will be Rs.20,
000/, 25% of which i.e. Rs.5, 000/, would be non-refundable even on late
submission of EPRC.
In case of any mistake in EPRC the fine will be charged as Rs. 100/- per such
mistake not more than Rs.1000/-.
In all preshipment/postshipment loans cases where it has been noticed that
shipment(s) was made before/after (in case of postshipment) disbursement of
finance, the shipment has to be treated as in order subject to recovery of fine at the
rate of Rs.2, 000/ and Rs.100/ per day for the period for which the refinance loan
remains outstanding on the part of the bank or up to the date of factual position
conveyed to concerned SBP BSC Office, whichever is earlier.
Fines under EFS part II
In case of non-performance, fine shall be charged at the rate of Paisa 37 per
Rs.1000/- or part thereof (product). However, where the performance is in excess
of the 50% of the prescribed level, fine will be charged at the rate of Paisa 28
perRs.1,000/- of the shortfall or part thereof.

For any other default by exporter/bank the fine will be charged at the rate of
Paisa37 per day per Rs. 1,000/- or part thereof. However depending upon the
nature of irregularity by the exporter and / or bank or both, in administering the
Scheme, such as misuse of the facilities, utilization of the Scheme on fraudulent
and or tempered documents etc., SBP may also consider to place an embargo for a
period of one year on the bank and / or exporter or both for availing financing
facilities under EFS.
Any other Forms required to be submitted to SBP the fine will be as Rs.100 per
wrong entry.
In case of excess availment the fine will be charged as paisa 37 per day per
Rs.1000/-.
Conclusion
All the functions in refinance schemes unit are performing very well. All the transactions are
verified and updated one by one. The only problem is that the system is very slow to retrieve
and update data. So the system should be replaced with high speed system for quick access
and update data to make the working more efficient.


Currency Management Unit
Overview
A department in which the management of currency is done is known as currency department.
To achieve the number of objectives this unit also focuses on the volume of note/coins
circulation. Claims of notes processing and destruction of the forged notes is also done by this
unit. Volume of notes in circulation and the deficiency of old notes also replace by the fresh
cash issue by the SBP BSC. In case of any complaint with respect to fresh cash or any other
cash counter this unit also takes action on complaint. CMU playing important role in SBP BSC
its main function includes issuing the fresh note to commercial banks, sending and receiving
remittances, monitoring and examination of cash in commercial banks payments & receiving
of clearly payable and claim notes.
Objective
Objective of visiting Currency Management Department is:
To get awareness about currency management function of SBP BSC.
To get knowledge about promoting and creating clean note policy
Recognizing genuine currency notes
Know about banknote security features
How to spot a counterfeit
Scope
A core function of currency management unit is:
Issuance and distribution of fresh notes and coins.
With drawls of soiled notes from circulation and their destruction.
Note exchange facilities.
Anti-counterfeit notes measures.

Role of Currency Management Unit
Issue notes and managing its circulation.
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
It directs the working criteria to commercial Banks for 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
Structure

Currency
managment
unit
Remittances
Cash monitering and examination unit
Fresh Cash issuance
Forged notes processing
Claim counter/Clearly payable notes

(A) Remittances

Remittances (Chest basis)
It means physically movement of funds from one place to another. It may be inflow of
remittances or outflow of remittances. Designated branch of NBP perform treasury functions
on behalf of SBP BSC where no field office of SBP BSC is located. NBP perform its own
banking operations as well as function of SBP BSC.
Chest Branch
NBP branch at district level which is designated by SBP BSC is known as Chest branch.
Currently 17 chest branches are working in Faisalabad region. Every chest has holding cash
according to value of business/government payments/receipts.
Sub-Chest Branch
NBP branch at Tehsil level which is designated by SBP BSC is known as Sub-Chest branch.
Total sub chest branches are 224. Both chest and sub-chest branches submit daily report to
SBP BSC according to their region.
There are 2 possibilities in chest & sub-chest branches regarding their holding capacity:
Cash exceeds from its holding capacity.
Cash below from its holding capacity.

Cash exceeds from its holding capacity
If issue office Lahore found that any chest branch has cash more than its holding capacity
then Currency officer Lahore issue order to chest branch to transfer their surplus funds to
SBP BSC Faisalabad.


Cash below from its holding capacity
If any chest branch has cash balance below of its holding capacity then currency officer
Lahore issue order to SBP BSC FSD to replenish it as and when needed.
Remittances (Intra field offices)
There are 16 field offices of SBP-BSC working in Pakistan. On the order of SBP Head office
Karachi, SBP-BSC field offices also send and receive remittances. Field office having
surplus cash transfers it to field office which has shortage of cash.
Example
If SBP-BSC Faisalabad has shortage of cash and SBP-BSC Multan has surplus of cash then
HOK send order to SBP-BSC Multan to transfer it to SBP-BSC Faisalabad.
Documents
Order From HOK by post/mail( CM Approval)
Letter to Railway for delivery (Station Master)
Letter to DPO for police squad
Remittances order to Vault
Credit note issued to Railway which collect freight from HOK
Boxes are packed in the presences of an authorized person who is responsible till the delivery
at destination; he will be responsible to tally the cash which is loaded in box and what is
received at the receiving SBP-BSC office. Police squad is responsible for number of boxes.
Police strength varies according to value of cash.


(B) Cash Monitoring & Examination Unit
Operations
Following are the major operations perform by cash & monitoring & examination unit:
SBP-BSC is rigorously following clean note policy from last many years.
In addition to regular supply of fresh notes, the following have also contributed to
improved quality of banknotes in circulation.
o Speedy disposal of soiled notes
o Automation of cash processing activities
o Discontinuation of the practice of stapling banknotes has all.
SBP-BSC issued instructions to commercial banks to sort out banknotes into issuable
and non-issuable categories.
Only clean banknotes are to be issued to public.
To ensure that only clean notes remain in circulation, the field offices of SBP-BSC
vigilantly kept on withdrawing the unfit notes from circulation.
To implement clean note policy monitoring activities continue throughout the year.
Then monitoring team submits report to SBP-BSC. This report is submitted to HOK
and also examine by SBP-BSC (FSD).penalty is charged which is calculated by SBP-
BSC (FSD).
On the complaint of general public examination is also conducted by SBP-BSC
(FSD).
All the commercial banks are restricted to provide services to general public e.g.
Commercial banks provide facility to public to submit their utility bills from
9.00 to 5.30.
Commercial banks are also bound to exchange notes of general public.
Banks should provide Prize Bonds to general public.
They should have coins in sufficient quantity.
They should provide coins against currency notes and currency notes against
coins on the demand of customer.

(C) Issuance of Fresh Cash
Policies are prepared by the Head Office Karachi (HOK) for the issuance of fresh cash. Fresh
cash issued by the SBP-BSC for the general public from their counters within the Office and
some specific branches are also chosen for the general public to issue the fresh notes.
Commercial Banks are also get bundles according to their limit for their account holders to
facilitate them.
SBP-BSC HOK gives distribution plan for issuance of fresh notes. Sometimes they give the
policy and allot the limit to the commercial banks and other institutions and sometimes the
HOK gives the liberty to the field offices that they maintain limit for Financial Institutions
(FI). This time HOK gives the liberty to maintain limit for each and every FI according to
their perception and requirements. Variations may be made among city branches for fresh
notes. Inspection team will also check that where these fresh notes are used.
Documents required for fresh notes

Submission of Request letter
Report about how many fresh notes consumed.
Report about where fresh notes are used.
(D) Forged Notes Processing
Counterfeit money is currency that is produced without the legal sanction of the state or
government; counterfeit government bonds are public debt instruments produced without
legal sanction, with the intention of "cashing them in" for authentic currency or using them as
collateral to secure legitimate loans or lines of credit. Forgery is common in currency notes
medium denomination.


Procedure
When any currency is captured by Policy which is fake /forged, police will register FIR
against the person from whom they recovered fake currency notes by getting clarification
from SBP for these fake notes. Forged notes series and number will be mentioned in FIR.


(E)Clearly Payable & Claim Counter
It refers to the claim of notes in the case of old, Torne or any other case due to which that
particularly note cannot circulate in the open market. There are two main types of notes
presented over the counter.

Clearly Payable
These notes are paid on the same day through one window operation to presenter if:
Security features are present on the note.
Note is not soiled.
Note is intact.
More than 75% of the note is available including the portrait of Quaid-e- Azam.
Accepting Authority
Notes of denomination of Rs.10-20 is signed and passed by Senior ACO.
Notes of denomination of Rs.50 is signed by TO & ACM.
Notes of denomination Rs.100 is signed and passed by TO & ACM (CASH).
Claim
Counter
Clearly
payable
Claim
notes

Notes of denomination Rs.500-1000 is signed and passed by TO, DCM.
Notes of denomination Rs.5000 signed and passed by DCM & CM jointly.
Claim Notes
These notes are paid to presenter after examination by cash department.
Notes are claimed if:
They are oily, Washed, Burnt.
Note is not less than 50%.
Portrait of Quaid-e- Azam is destructed intentionally.
Security features are not clearly visible.
Mutilated More than hale intact.
Full cut.
Eaten by insects.
Discolor/rusty.
Undecided and unclaimed cases are sent to double lock in vault where kept for 1 day.
Procedure
Claim application is filed by customer along with the claim notes. If the note is
accepted then it is paid to the presenter next day.
If it is rejected, then the note is kept by the cash department and a letter is issued to
the claimant that the note has been rejected.
The rejected notes are kept for a period of 6 months. The claimant can make an
appeal for the note within these 6 months. If appeal is received then they are kept for
another 6 months and they are destroyed on the 10th of each month.


One Window Operation
Denominations of Rs.10, 20, 50, 100 are presented over the counter then payment is made on
the same day if the value of presented notes is not more than Rs.1000. If the value of
presented notes is more than 1000 then the payment will be made on next day.
Next Day Payment
Denominations of Rs.500, 1000, 5000 will be paid on the next day. There is no limit on the
value of presented currency notes.
Suggestions
Public awareness should be created to attain the clean note policy.
Remittance sending procedure should be changed due to much complicated steps
are followed like railway time, police dealing and very long procedure of sending
a remittance which cost much time wasting (Manual updating).
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.


Public Account Unit
Introduction
This particular unit is responsible for central, Provisional and District Governments
Receipts and Payments
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.
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 public Accounts Unit
Its structure and head of responsibilities
Check out the flaws in their operational activities
Evaluation and suggestions for performance improvement of that Unit

Scope of PAU
The scope of that Unit is very wide and nature of it is very important in the SBP.
Maintaining Accounts of government
Reporting their daily transactions to DAU
Assignment Accounts are maintained here
Major portion of State Bank of Pakistan is the closing of clean cash book. Clean cash
book is the record of the whole day transitions and their net effect after receipts and
payments. Without PAU balance it cannot be maintained. Mainly these are;
Receipts & payments of government
Gives net off all receipts & payments through SBP.

Key Role Of PAU
Payment on the behalf of Federal and Provincial Government.
Receipts on the behalf of Federal and Provincial Government.
To perform these roles PAU uses three methods which are as under:
1. Payment/ Receipt through cash.
2. Payment/ Receipt through clearing.
3. Payment/ Receipt through transfers.

Denomination Of Cheques
Green cheque color for federal government.
Orange cheque color for provincial government.
White cheque color for district government.

Types of Govt. Accounts
1 - Drawing Account
When an Officer of a Government Department is authorized to draw funds from Bank without
limit such an account is called Drawing Account. Example NSO etc.


2-Assignment Account
In case of certain Department, Accountant General Authorizes the bank is to open Ledger
Deposit Accounts in favor of the head of these Departments and Army unit are called
Assignment Account. Cheque draw in this account within the limit, limit may b monthly r
annually.
Examples
GPO, Air force, Remote deposit account etc.
GPO assignment monthly and others are annually.

3- Personal ledger account
A PLA is also a facility provided to a delegated authority to incur expenditures up to a
prescribed limit.
PLA is a ledger account maintained by DAO/TO.
Spending limit controlled by these offices
The DAO issue an official cheque book.
DOs/DDOs of these departments draw cheque on treasury.
Treasury officer then affixes his pay order and draw the same on SBP-BSC office.


Cash Payments & Receipts
This section deals with the direct receipts and payments of government accounts. 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.
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
card (SSC) has to provide to PAU.

3 Signatures on SSC
Cover letter
Attested photocopy of staff order
Attested photocopy of charge report
Attested photocopy of relieving report
Attested photocopy of CNIC of DDO
.
In case of cash receipts, General public and Banks can deposit payments drawn on them in
cash. Banks are also issued cheque book against their accounts in SBP (BSC). Cash is received
with the challan form. It is entered in system and after proper verification of it with the
systematic report; if there is no mistake then vouchers are prepared. Account of concerned
bank is debited against the receipt. And hence amount is transferred to concerned account.


Cash Payment Procedure

Cash Receipt Procedure

PREPARATION OF VOUCHERS & DELIVERED TO DAU
TALLYING WITH SYSTEMATIC REPORT
RECEIVING OF INSTRUMENTS FROM CASH COUNTER
RECIEVE MONEY FROM CASH PAYMENT COUNTER
AUTHORIZATION
ENTRY/INPUT
SCHEDULE VERIFICATION (FROM LIST OF RESPECTIVE DEPTT.)
TOKEN ISSUED AFTER SCURITNY
PRESENTING CHEQUE ON RECEPTION
DIRECTLY CASH
ACCEPT ALONG
WITH CHALLAN
FORM
CASH
DEPARTMENT
INPUT/
AUTHORIZATION
TICKING WITH
SYESTMATIC
REPORT IN PAU
PREPARATION OF
REPORTS &
ABSTRACT
VOUCHERS
TRANSFER OF
PAYMENT TO
TREASURER

Transfer Payments & Receipts
Cheque is presented on window along with Challan form/ Transfer form. Party receives token
from concerned officer, if cheques have been passed then instruments are sent to District
Account Office on the next day. In case of receipts all the commercial Banks are operating
their current account with SBP and they deposit their challan through their cheques in SBP,
Govt. accounts are credit and concerned bank will be debited.
Types of Accounts (Major Heads)
It deals with the fallowing types of accounts
Central-I (Non Food) Provincial-I ( Non Food)
Central II (Food) Provincial-II (Food)
Central III (C/A Railway.) Provincial-III (Zakat from central VIII)
Central VIII( Zakat) Provincial-IV (District Govt. accounts)

Central XI (Railway Lahore receipt)
Central XVII (Pay and pension railways)
Central XVIII (PSDP development projects)

Clearing Payments & Receipts
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.
Clearing Services Offered By NIFT
Overnight clearing (24 hours)
Same Day/high value Clearing (3 hours)
Intercity clearing ( 48 hours)
Countrywide local US dollar clearing (not deal in this bank)

Intercity Transfer Clearing

If cheque is presented in a bank other than FSD but it is issued by Faisalabad Account
Office then it will come in SBP-BSC FSD office for clearance. Such clearing is called
intercity clearing.
Same Day Clearing

Same day clearing is also done through this department. This includes urgent clearance
with some extra charges. There is a limit on the amount that can be consider for same day
clearing i-e cheques of 100,000 or more.
Clearing Payment Procedure

Receipts through Clearing
NIFT perform the clearing function for SBP.
If a customer has to pay a bill against Provincial or Federal Government through any
Commercial bank then PAU department will send it to concerned bank through NIFT
for clearance.
After clearance the concerned bank account is debited according to receipt amount.
BANK
CHEQUE
PRESENTED
BY NIFT
SCURITNING
OF
INSTRUMENT
INPUTTING/
AUTHORIZATION
&
PASS WITH LIMIT
TICKING
INSTRUMENT
AFTER
VERIFICATION
ABSTRACT
PREPARATION
DESPATCH
VOUCHERS
TO
RESPEFTIVE
TREASURER

Clearing Receipt Procedure

Suggestions

To avoid the mistakes and time wastage you should have to make computerized
schedules.
Procedure should be under one cabin to save the time of employees and customers both.
In this way more customers will be served.

DEPOSITED
THROUGH
BANK
COLLECTION
BY NIFT
INPUTTING/
AUTHORIZATION
TICKING
WITH
CHALLAN
ABSTRACT
VOUCHERS
TO DAU
DISPATCH TO
TREASURER

Prize Bond Unit
History
The bank is responsible for the management of the public debt. The working related to issue,
Supply, Sale, Encashment and handling of prize bonds. Holding draws thereof and other saving
instruments of federal government was transferred to SBP-BSC.
Objective
The purpose behind visiting Prize Bond Department is:
To understand the basic purpose of issuing Prize Bonds.
To understand how prize bonds are issued to general public.
To know how lucky draws are conducted.
How the amount of prize money is claimed.
To understand different National Saving Schemes launched by Government.

Purpose

Collection of funds for the government from general public.
Promote saving habits in the general public.
Economic or social development is also one of the purposes of Prize bonds issuing.
Prize Bond
Prize Bonds are purchased by the public for saving purpose and winning prize money, draw is
very much fair in SBP, because of its fairness in its draw procedure it has heavy sale all over
the Pakistan. The issuance of Prize Bonds started in October 1960.it is the largest saving
scheme in Asia.

Denominations Early 1960
Rs.5, 10, 11
Denominations Early 1999
Rs.50, 100, 500, 1000, 5000, 10000, 25000
Current Denominations
Rs.100, 200, 750, 1500, 7500, 15000, 25000, 40000
Security Features
These bonds are printed in the offset process on paper & would carry the following security
features.
In Paper
Enlarge watermark
Micro-printed security thread
Invisible colored
Fiber. (stars, blinking dots)

In Printing
Micro-printed tint in rainbow color
Guilloche patter
Visible fluorescent rosette
Invisible denomination print
Numbering in red fluorescent ink.
Multi-color background

Bond Issuance Process

Issuance process of the Prize Bonds is as follows:

1).Printing & Supply of the National Prize Bond

Prize Bonds are printed by the Pakistan Security Printing Corporation (PSPC) in such forms
which are approved by the Central Government in consultation with the State Bank of Pakistan.
The PSPC will ensure that paper, ink and material which are used for printing of Prize Bonds
such as are not easily available to facilitate forgery.

2).Delivery of Prize Bond By The Pakistan Security Printing
Corporation Limited

The Currency Management Department decides the demand of prize bonds and give
instructions to the PSPC to print the required denominations of the prize bonds or as ordered.
The PSPC after completing the printing, move those bonds to Public debt offices situated in
Lahore and Karachi. The Public Debt Offices will be responsible for the supply of Prize Bonds
to other Offices of the State Bank of Pakistan under their jurisdiction. Prize Bonds will be
issued by the Offices of the State Bank of Pakistan at Karachi, Lahore, Quetta, Peshawar,
Islamabad, Hyderabad, Multan, Faisalabad, Rawalpindi, Sukkur, Bahawalpur, D.I. Khan,
Gujranwala, Sialkot, and Nazimabad. Lahore PDO office covers the SBP (BSC) of Punjab and
Khyber Pakhtunkhawa, and Karachi PDO office covers the SBP (BSC) of Sindh and
Baluchistan.


3). Receipt & Examination Of Prize Bond

The Prize Bonds will be received at PDO offices after 100 % examination and counting they
are moved to the Field offices same inspection and counting is also done over there and
responsibility is then shifted to them. After the prize bonds have been subject to cent percent
examination and will be taken in the Stock Account in the Stock register of the Fresh Prize
Bonds.

4). Sale of Prize Bond

Prize Bonds are sold against cash and no formalities or documents are required for issuance of
the Prize Bond and no need of registration here. Printed Prize Bonds are stamped at the time
of issuance; stamp may be manually or automated. That stamp indicates the date and place of
issue; this stamp is of tri color Red, Blue and Green in automated format.


Draw Process

Drawing process contains the following steps:

Draw Schedule

Draw schedule is prepared/Announced by National Savings Ministry of Finance Government
of Pakistan. Prize money of draw is decided by the National Savings Ministry of Finance
Government of Pakistan. Each denomination draw held on 1st and 15th of each month. National
Savings give prize of the Bonds by closing the sale of the Prize Bonds for 2 months of that
denomination and that 2 months period is called Shut Period.

Denomination
(Rs.)
Date Month
1500 1
st
January April July October
750 15
th
January April July October
7500 1
st
February May August November
25000 1
st
1500 15
th
40000 1
st
March June September December
200 15
th
March June September December


Draw Committee
Drawing committee consists of 6 members that are following:

Person nominated by Government (chairman)
DCM of SBP-BSC office (secretary ACM)
Assistant Chief Manager of SBP-BSC office
Regional Head offices Joint Director of National Savings of respected city
2 Executive members of Chamber of Commerce of respected city.

Winning Prize Bond
Winning prize bonds are further divided into two parts.
Small prize money
Higher prize money
Small Prize Money
The prize bond whose wining value is equal to or less than 18500 is called small prize money
these prize bonds are deal by the cash department or payment of these prize bonds are made at
the same time at counter these include 3
rd
prizes of Rs100, 200, 750, 1500.


Small Prize Money Procedure
Higher Prize Money:
The prize bond whose wining value is greater than 18500 is called higher prize money these
prize bonds are deal by the prize bond department or payment of these prize bonds are required
some procedure and payment not made in cash but transferred to claimant account by drawing
payment order. These include prizes of 1
st
and 2
nd
prizes of Rs.100, 200, 750, 1500 bonds and
prizes of Rs.7500, 15000, 25000, 40000.
The validity period of the winning prize to be drawn is 6 years from draw after
that the person cannot claim the winning amount.
Verification of Denominations
Rs.100, 200, 750, 1500, 1
st
and 2
nd
prizes signed by OG2, ACM and DCM
Rs.7500, 15000, 25000, 40000 third prizes signed by OG2,DCM and ACM
Rs.40000 1
st
prizes Rs.7500, 15000, 25000, 400002
nd
prize signed by the OG2, ACM,
DCM, & CM

Form PB-23
ID card of the
claimant
Origional/photo
copy of bond
Directly payment to
claimant

Claim Payments

Prize up to 18500 is paid at the same day at counter.
Prize above 18500 is paid in 10 working days.
Prize up to 500000 is paid in 15 working days.
Above 500000 is paid in 20 working days.

Higher Prize Money Procedure

National Saving Scheme (Securities)
There are two schemes which are operated in SBP (BSC) these are:
I. Special Saving Certificates
II. Defense Saving Certificates
Fill PB-23 form
attatch original &
copy of priza bond,
ID card copy
submitted to
receipt & payment
counter
sent to related PDO
for confirmation
Receive
confirmation
Generate register of
payment/draw PO
Sent to IMU unit for
pre-audit
system generated
authorization
On surrender of
receipt on due date
PO is handed over
to claimant

Objective
These schemes are introduced by Government to encourage the saving in the public and to get internal
finance for its projects.
1. Defense Savings Certificate

The Government of Pakistan introduced Defense Savings Certificate scheme in the year 1966.
The scheme has specifically been designed to meet the future requirements of the depositors.
This is 10 years' maturity scheme with built in feature of automatic reinvestment after the
maturity. These certificates are available in the denominations of Rs.500, Rs.1000, Rs.5,000,
Rs.10,000, Rs.50,000, Rs.100,000, Rs.500,000 and Rs.1,000,000/-

Who Can Invest?

These certificates can be purchased by a single adult, a minor, two adults in their joint names
with the options of payable to the holders jointly (Joint-A) or payable to either (Joint-B). An
adult can also purchase these certificates on behalf of a single minor, two minors jointly or
himself/herself and a minor jointly.

How to Purchase?

These certificates can be purchased from any National Savings Centre (NSC), Pakistan Post
Offices (PPO), Authorized branches of Scheduled Banks and State Bank of Pakistan (SBP) by
filling in a prescribed form called SC-1, which is available at all the above offices of issue free
of cost. A copy of the Computerized National Identity Card (CNIC) or in case of a foreign
national, a copy of the Passport is required to be attached with the application form.


Mode of Deposit

These certificates can be purchased by depositing cash at the issuing office or by presenting a
cheque. The certificates shall immediately be issued on receipt of cash. However, in case of
deposit through cheque the certificates shall be issued from the date of realization of the cheque
after receipt of the clearance advice.

Investment Limit

The minimum investment limit is Rs.500/-, however, there is no maximum limit of investment
in this scheme.

Encashment

These certificates are cashable at par any time after the date of purchase. However, no profit is
payable if encashment of DSC is made before completion of one year. Further, certificates
purchased on or after 15-11-2010 cannot be automatically reinvested.

Return (Profit)

In this scheme the profit is paid on maturity or encashment for completed years. Every Rs.100,
000/- will become Rs.106,000/-.after one year income tax is deducted @10% on profit
payment.


Tax & Zakat Status

At present withholding tax @ 10% is deductible at source on the profit(s) earned. The Zakat is
collected at source as per options.

2. Special Savings Certificates (Registered)

Keeping in view the periodic needs of depositors, this three years' maturity scheme was
introduced in February, 1990. These certificates are available in the denomination of Rs.500,
Rs.1000, Rs.5,000, Rs.10,000, Rs.50,000, Rs.100,000, Rs.500,000 and Rs.1,000,000/=. Profit
is paid on the completion of each period of six months.

Who Can Invest?

These certificates can be purchased by a single adult, a minor, two adults in their joint names
with the options of payable to the holders jointly (Joint-A ) or payable to either (Joint-B). An
adult can also purchase these certificates on behalf of a single minor, two minors jointly or
himself/herself and a minor jointly.

How to Purchase?

These certificates can be purchased from any National Savings Centre (NSC), Pakistan Post
Office (PPO), Authorized branches of Scheduled Banks branches and the offices of State Bank
of Pakistan (SBP) by filling in a prescribed form called SC-1, which is available at all the
above offices of issue free of cost. A copy of the Computerized National Identity Card (CNIC)


or in case of a foreign national, a copy of the Passport is required to be attached with the
application form.

Mode of Deposit
These certificates can be purchased by depositing cash at the issuing office or by presenting a
cheque. The certificates shall immediately be issued on receipt of cash. However, in case of
deposit through cheque the certificates shall be issued from the date of realization of the cheque
after receipt of the clearance advice.

Investment Limit

The minimum investment limit is Rs.500/-, however, there is no maximum limit of investment
in the scheme.
Tax & Zakat Status
The profit retained on these certificates is paid after the deduction of 10% withholding tax at
source. Zakat is collected at source as per rules the rate of zakat is 2.5%.
Suggestions
Change internal environment make it more comfortable.
Proper furniture sitting and air condition system.
Save time & efficiency in work due to increase the number of employees
Proper couching classes and training
Specially focused workshop, seminar and awareness programs
Access to data easy


On-site Verifications
Introduction
Onsite inspection is basically the function of Export Finance Unit. The scrutiny of documents
to be submitted by exporter will be done by the concerned bank. The onsite verification
team of SBP BSC and inspectors of Banking Inspection Department or any other authorized
officer of the State Bank of Pakistan shall examine the cases of finances of the bank under
the Scheme, while making a regular or special inspection of a bank.

On-site Verification

Onsite verification is done via teams and schedule decided by SBP HOK. Visits are
done annually (any fiscal year).
The onsite examination team verifies and checks all the documents on which the loan
has been refinanced already
After the visit the team whose team leader is ACM made the onsite verification
report, which contained all the irregularities, misreporting, late shipment/short
shipment and details of fine.


Ways of Onsite Verification
The concerned SBP Office will undertake random onsite checking of refinance cases
at banks and will examine the entire documents. Verification team of SBP BSC Offices
will verify at least 70% of the amounts of refinance disbursed under each part, ensuring
coverage of all types of cases i.e. Small, Medium and large, during the verification
process. In case irregularities are pointed out involving recovery of fine on account of
any default in processing of case or scrutiny of shipping documents, fines levied upon
banks for such irregularities shall not be refunded. However, where such irregularities
/ deviations were found to have been willfully suppressed by the employees of bank
the concerned institution shall be at discretion for taking such punitive actions as
considered appropriate by the management of the bank.

The concerned SBP-BSC Office will nominate their representative officers for the
verification of EFS cases at any particular branches of bank. The SBP-BSC Office will
issue a letter to the concerned bank at least 15 days prior to schedule visit for
verification of EFS cases without intimating the actual date of visit to the concerned
bank. The bank shall extend all possible help for the smooth checking of the cases and
the officials of the bank shall cooperate with the authorized officers to carry out their
work expeditiously. Such verification shall be in addition to the regular inspection of
the bank conducted by our Banking Inspection Department. As such checking by
Export Refinance Section of SBP-BSC Office, shall not absolve bank from its
responsibilities under the Scheme.

In case of transfer of limit/performance under EFS PartII the NOC issuing SBP BSC
office will conduct onsite verification of EE-1/EF-1 statements and relevant documents
during onsite verification of the bank even if no loan has been availed by the exporter
at that bank. Any violation observed therein will be communicated to the NOC
receiving office, in order to charge fine for violation under the provision of EFS. On
site verification of documents against EE1/EF1 statements will also be carried out at

bank who issued NOC in favor of other banks within one centre for the purpose of
transfer of exporters limit/performance.

Part 1 Loans:
Verification will be of:
Annexure D
EPRC (Export Proceeds Realization Certificate)
Contents of Annexure D:
Name and address of the Direct Exporter
Name and address of the Indirect Exporter
ELC/FEO against which finance was obtained
No.
Amount
Date
ILC/SPO against which finance was obtained
No.
Amount
Date
No. of ELC/FEO against which shipment was effected
Name of the commodity exported
Commodity supplied
Date of shipment (As per B/L)
Date of Supply
Amount
Date


Particulars of relevant E forms Nos. in case of shipment by DE
No.
Amount
GRN / Truck receipts Railway Receipts in case of supplies by IDE
Amount
Date
Date /Amount of finance availed by exporter
Date / Amount of refinance obtained from SBP by financing Bank
Amount/ Period of refinance utilized in the name of DE
Amount/ Period of refinance utilized by IDE
Profit/Return charged from DE
Profit/Return charged from IDE
Date of realization expected
Contents of EPRC
E-Form No.
Description commodity exported
B/L and date and country of destination
No. and date of invoice with value
Amount realized
Foreign currency
Pak rupees
Date of realization
Freight
Commission
Insurance
Net FOB value
Foreign currency
Pak rupees

Date of submission of triplicate copy to the SBP
Statement in which transaction has been (will be reported) to SBP
Wholly payment, advance/partially
All these particulars are verified through:
SWIFT letter (for date of realization of export proceeds)
Utilization certificate (how much amount of finance is used for export).
Part 2 loans
Verification will be of:
EE 1 Statement
EF 1 Statement
Through checking their shipments from FEOD (Foreign Exchange Operations Division)
because it receives the monthly returns from authorized dealers.


Foreign Exchange Operations Division
Introduction

The division which deals with the cases related to the foreign exchange dealings. When the
foreign exchanges is brought into or send out of the country then the record of the each and
every single transaction is maintained in this department. This Division is actually worked
under the EPD (Exchange Policy Department). All the Departments in different Field offices
report to FEOD-HOK which further reports to EPD. The reporting of data is done both
manually and electronically. Through Manual reporting AD report to FEOD while Electronic
posting through ITRS is done by Commercial Bank called Authorized Dealers. That
department work under following rules and regulations:

Foreign Exchange Regulation Act 1947
FE Manual 2001
Booklet of Instructions, 1989
FE Circular

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

Sections of Foreign Exchange Operations Division

1).Returns
The main function of this department is to Record and monitor all the Foreign transactions. All
types of returns are received in this section. In this section documents with different forms are
separated. Documents with E Forms are sent to the Export section and documents with Form-
I are sent to the Import section.
FEOD will further record the transactions on summary statements.
S1 is for buying and selling

FEOD
Returns Export Overdue
DLTL section
Miscelleneous
Import/export

Export Returns (Inward Remittances)

In export section Inward Remittances are recorded on JO-3 Schedule
In case of Exports Payment Due reporting would be done on Schedule A-1/O-1 and E-
forms are also checked to check the Correctness of Shipment. At the front side of the
form-E following particulars are 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 Shipment
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
Amount in figure and Amount of words
Quantity
Mode of transportation

In case of Advance or Partial Payment Recording would be done on A2/O2 form.
The only difference between these two is that in case of advance payment E- form is
not required so exporter can utilize it for his future exports while in case of partial
payment E-form in should be mentioned.
Similarly if amount of Trade is more than USD 10,000 then it is recorded on Form R
while if it is lower than that then it is recorded on IRV (Inward Remittances
Voucher).

Import Returns (outward Returns)

In Import section all the imports Returns of the those importers are recorded who get the
finance from the Commercial Banks whose been licensed by the SBP. The importers are
allowed 120 for the import of the goods; the imported commodities will have to be brought in
to the boundaries of Pakistan. These imports can be made either through the documentary
credit or through the advance payment made by the importer. In case of the advance payment,
the importers are required to submit A Performa invoice of the deal and An Undertaking form
signed by the exporter regarding the agreeing upon the deal of 120 days for the accomplishment
of the consignment otherwise he will be penalized with a certain percentage of the consignment
Reporting of Import is done on E2/P2 Schedule
If Foreign Exchange is to go out of country for travelling than that would be recorded
on E3/P3 Schedule.
While if the FE is to go out for the purpose other than trade than that would be recorded
on E4/P4 Schedule.


Miscellaneous returns
Under this section of the unit, the record about all the private remittances except the imports
and exports of a particular country is being maintained.
The categories of these miscellaneous returns are as below
Family remittances
Educational fees of Foreign Universities.
Commission Charges and etc.
The form to be submitted by the person is called as M-Form and is recognized by its red
color.
In Summary S6 if the Commercial Bank sells the Foreign Exchange then it would be recorded
on Schedule JO3 and if they purchase the FE to make payments then that would be recorded
on Schedule C.
2. Export Overdue section

Under FERA-1947 the exporter is bound to bring in the foreign exchange earned through a
particular international trade within 180 days after the granting of the date of shipment. If the
exporter fails to do so he will be given a show cause notice. The reporting is done under Export
overdue Reporting System (EORS). In this all the Ads submit the report all the unrealized
Export bills to SBP (BSC) on V-16 statement and to HOK via electronic Media.


Statements For Export Bills Overdue

Procedure for Filing the Complaint against the Exporter
After 180 days or due date, the AD will provide a V-16 form to the SBP (BSC).
While AD and exporter is given a show cause notice
Show cause notice for A.Ds: To submit all the documents within 21 days.
Show cause notice for exporter: To submit the justification for non-realization of 21
days
If exporter or A.Ds do not respond to the show cause notice then Legal notice is given
to A.Ds and Exporter to submit the above mentioned documents within 21 days.
If the exporter or A.Ds still do not respond to the legal notice then outstanding then a
complaint is lodged against the Exporter/AD in Foreign Exchange Adjudication Court.

V-15
Statement for Realized + outstanding Export Bills.
V-16
Statement for un Realized Export Bills.
V-17
Statement for Realized Cases.

Procedure for Filing the Complaint against the Exporter

When bill becomes overdue and case is referred to adjudication, we have a format of
launching complain:
Attach documents collected from AD
Attach notices sent to AD and exporter
Then case is closed after adjudication decision and penalties are charged to AD or exporter,
whoever is defaulter.
Penalties charged by Adjudication
For authorized dealer: Rs.5000 for first day and Rs.2000 per day case outstands till
the default exist.
Penalty for Exporter: It is up to 5 times of export proceeds.
4. Draw-Back Local Taxes And Levies Section

DLTL was established to facilitate the exporters of the country. When an exporter exports
some eligible goods, govt. gives subsidy to him to encourage exports from the country.
The rebates for different exported commodities are mentioned below:

Procedure for Availing DLTL

First of all The Exporter has to provide the Following Documents to the SBP through his Bank
to get that Rebate. The documents are:
Annexure 3: Exporters Claim
Annexure 4: Banks undertaking to SBP
Appendix 2: Association Certificate.
Appendix 3: Exporters Undertaking
Copy of the Invoices
Copy of the E-Form with Prescribed Stamp.
1 copy of the E-form would be for Exporter
1 would be for AD ( commercial Bank)
1 would be for SBP.
Copy of the GD form while in case of old GD form Examiners Report is also required.
Shipping Documents (B/L or Airway bill).
FEOD after verifying all these documents, credit DLTL to the banks account and the
bank will credit it to the exporters account according to the Schedule of Government
of Pakistan.

1% on Processed
Fabric
2% on Home Textile
3% on Garments

Moreover, if SBP find any discrepancy, forgery or any other fault then it will impose
the penalty to that AD and that penalty would be KIBOR+4% penal interest.

5. Miscellaneous Section

This section is actually for currency Companies so it will involves
In this Advance Section:
Advance Payments would be there and for that all the Shipping Documents would be
required for Re-imported Goods.
In case of Excess payment following things would come under this:
Foreign Exchange companies Receipts and Payments.
Banks Guarantees
Letter of Credits.

Sections of Miscellaneous

5 sections come under this head.
Miscellaneous Export Cases
Import Cases
Advance Payments
Foreign Exchange Companies
EE/FE statements.


Miscellaneous Export Cases

It is further divided into following Sections:
Return of Consignment
Change of the Buyer
Import-Cum-Export cases
Time Barred Advance Payment
Export of gold jewelry

1. Return of Consignment

As we are sitting in the buyer Market so thats why there arise some situations like demand
gets down, quality mismatch or importer goes to liquidation in which the importer refuses
to accept the consignment. So in that case there would be no other way except to bring
back that consignment the Exporter need to submit the following documents to get approval
from SBP.
Exporters Request
ADs Forwarding letter
GD 1 Copy
E-Form Copy
Commercial Invoice
Correspondence Between importer/Exporter and Foreign Bank.


2. Change Of Buyer &Discount

If exporter has to change the Buyer then again permission would be taken from the SBP
along with the reason of the refuse from the previous importer. The documents required
would be:
Exporters Request
GD 1 Copy
E-Form Copy
Commercial Invoice
Shipping Documents (GD-1, E-Form, Advices, and B/L).
Revised Contract.
Sometimes exporter offers discount on nominal defected goods to importer. In such case up to
10% discount of invoice value is allowed. For offering more discounts, approval from SBP
BSC is required.
3. Import-Cum-Export cases

Sometimes if importer doesnt get satisfied with the quality of the goods imported then he
send back the consignment to the exporter and then the Exporter removes all the
discrepancies and make that goods according to the contract between them. So such cases
would be reported under this head.
4. Time Barred Advance Payment

According to the new regulation of FE Manual the Advance payment must be utilized
against the proper head for which it has accepted and it get expired within 1 year. So
following documents are required:
Request letter of the exporter

Original and Advance payment vouchers
Explanation of the purpose for which payment has accepted.
If Remitting Party is other than the original Remitter then NOC would be required from
the original Remitter.

5. Export of Gold Jewelry

Export of gold jewelry is always by hand. It is required to bring foreign currency in
Pakistan equivalent to the value of gold exported. For less foreign currency, remaining
gold will be brought back. Shortness of foreign currency is reported by AD to SBP
BSC and then penalties are charged accordingly.

Import cases

In case of Import cases the following documents are required
Reason of advance payment for import approved by SBP.
Importers request
Contract Copy
Correspondence between importer/exporter.
In 120 days the importer is bound to bring the things in the country and need to submit
the Bill of entry issued by Custom Office.
Commercial Invoice
In case of import of machinery
Request letter by the owner
Forward Letter/ contract
Performa invoice ( Expenses+ Fault+ Repairing Time)

1) Establishment of L/C

If there comes any amendment in the payment clauses of the L/C then it must be
approved from SBP and permission is required only if there is extension in payment
terms. If there is contraction in the payment terms then there is no need to get approval
from SBP for that. While following documents are required:
Request letter
L/C Copy
Revised Contract
Correspondence between Importer/Exporter.

2) Advance Payment for imports

Advance payments based on the following documents:
Contract basis (up to $10,000 advance payment allowed)
LC basis (100% advance payment allowed)

3) Excess payment

Payment can be in excess the amount certified on I-Form against imports due to any
reason. SBP-BSC allows the A.D that they can approve excess payment up to 5% for
import purpose. When the amount of excess payment exceeds 5% then A.D is bound
to get permission from SBP-BSC.


4) Bank guarantee for Umrah services

It provides services for hajj & Umrah to travelling agents that are registered by ministry
of Saudi Arabia religious affairs.

5) Re-export of imported goods

For the re-export of imported goods importer must have to take approval from SBP
through their ADs.

Pre & post licensing

EPD (Exchange Policy Department) give licenses to the Companies and do inspection and
submit the reports to the SBP. FEOD conducts pre and post licensing inspections of those
companies.

Verification of EE/EF statements

All the Ads submit their EE/FE statements to FEOD which will verify those statements and
after this verification those Ads submit these statements to Export Refinance Department and
get limit from them.


Foreign Exchange Adjudication
Department
Introduction
Foreign Exchange Adjudication Department (FEAD) is a court. These courts are made under
Adjudication & Appeal Rule 1988. Foreign Exchange Regulations (FERA) Act 1947 is the
basic frame work of FEAD. FEAD started working after 1988.
FEAD receives complaints from Foreign Exchange Operations Department (FEOD). These
complaints are related with exchange for overdue cases. Exports whose repatriation has
become due but proceeds not realized become overdue. Foreign Exchange Manuals limit for
realization of export proceeds is 180 days. These complaints are usually against the exporter
and sometimes against the authorized dealer for the non-realization of export proceeds against
goods exported.
Procedure For Lodging Complaints
When bill becomes overdue and case is referred to adjudication, Foreign Exchange
Operations Department has a format of launching complaint:
Attach documents collected from AD
Attach notices sent to AD and exporter


Adjudication Process
After receiving the complaint, show cause notice is issued to exporter or authorized dealer.
Then authorized dealer or exporter may or may not reply to the show cause notice.
If reply comes then there can be two situations:
Cause is satisfactory
Cause is not satisfactory
If cause showed by Authorized dealer or exporter is satisfactory then lenient decision is taken
at that time and no penalty is charged.
If cause mentioned by Authorized dealer or exporter is not satisfactory then party is called
through summon. Then the party comes and records his statements and asks for reasonable
time for the realization of export proceeds. FEAD provides him reasonable time. If repatriation
is made within reasonable time, FEAD takes lenient decision and absolves the party. If
repatriation is not made within reasonable time, FEAD takes decision against the party and
penalize him according to the penalty scale. FEAD forwards this decision to district collector
because he will collect the fine and deposit it with SBP BSC.
If authorized dealer or exporter does not respond to show cause notice or does not attend the
adjudication court then adjudication penalize the party according to ex-party decision.
Then case is closed after adjudication decision and penalties are charged to AD or exporter,
whoever is defaulter.


Penalties Charged By Adjudication
Penalty for Authorized Dealer

Its penalty meter is continuous. Rs. 5000 for first day and Rs.2000 per day case
outstands.

Penalty for Exporter

It is 5 times of export proceeds.

If exporter or authorized dealer is not satisfied with the penalties charged then he can file a
complaint against the charged penalty to challenge the adjudications decision with:
Foreign Exchange Regulation Applet Board, Lahore (or) Foreign Exchange
Regulation Applet Board, Karachi.
Usually the applet board returns the case to adjudication department for reviewing the decision.


Adjudication Courts In Pakistan
Karachi 3 courts
Lahore 2 courts
Faisalabad 1 court
Sialkot 1 court
Multan 1 court
Appointment Of Adjudicated Office
Adjudicated officers are now delegated with Governors notification published in Gazette of
Pakistan. First they were appointed with Presidents notification.
Conclusion
After visiting the Foreign Exchange Adjudication Department, we have learnt about how the
export overdue cases are dealt. Adjudication department mostly endeavors to be very lenient
with the authorized dealer or exporter while making the decision because its basic purpose is
not to charge penalty but to repatriate the export proceeds. This department plays very
important role for settling the cases between exporter/authorized dealer and Foreign Exchange
Operations Department.

TAYYEBA BASHIR (University of the Punjab) Page 77

Mission Statement
Our mission is to facilitate development of an inclusive financial system in the country through
effective monitoring of banks, awareness and information dissemination programs, targeted
research and surveys and linkages and consultation with all key stakeholders.
Vision Statement
Our vision is to transform into a dynamic field force having capacity to connect un-banked and
under-banked areas/sectors to the countrys financial markets.
Development Finance Support Services
DFG (Development Finance Group) is the parent department of the DFSD and AFU. The main
objective of the DFG is to create or develop an inclusive financial system in the country under
the umbrella of SBP-BSC. The DFG make policies and strategies to promote the financing
schemes of the SBP. It is the way to strengthen the economic growth of the county by creating
awareness about the financial services and availability of these services to the rural and lower
income groups.
The presence of DFG at the SBP HOK facing difficulties in disseminating information at grass
root levels so DFSD unit was formed at the Karachi field office and later AFU units were
established at 13 field offices.


Reorganization of DFSD
Development Finance Group (DFG) was established in SBP and simultaneously DFSD
and its field units have been set up in the 13 offices of SBP Banking Services Corporation
(BSC).
Later on in year 2011, the functions of Export Finance Division (EFD) and DFSUs have
been merged to Development Finance Division (DFD) and DFSD renamed as AFU.

Objectives and Functions of AFU
To promote formal financial lending through legal channel.
To Coordinate and interact with DFSD and banks ( region wise and Bank wise )
To communicate the banks policies and schemes to Stakeholders
To aware general public about the beneficial schemes regarding financing
To disseminate the information to the stakeholders
Monitoring, evaluating and disseminating of SBP-BSC financing schemes related to
Focus groups
Conducts research activities and carrying sectorial assessment studies to know about
the potential of every sector.
AFU liaison with Stakeholders and coordination with Regional chiefs and General
Managers of Commercial Banks regarding Development Finance related matters.


Core functions of AFU
1 Focus Group Meeting
Focus Group meetings are also being conducted by the AFU and the meeings conducted in that
particular way.
2 Biannual Meetings

AFU provides and interactive forum to meet with the stakeholders and that is
instrumental both in terms of disseminating the Polices and getting their feedback
regarding different issues they faced.
So meetings are called in which Area Manager/ Chief Managers along with the
Representatives of different Groups are invited and their feedback is obtained.
If the issues are of operations level then they get resolved by the BSC itself
But if the issues are of Regulatory level then that issue is forwarded to Headquarters.

3 Awareness programs on development finance
One of the major objective of DFSD is to disseminate DFG-SBP polices &programs the DFSD
& its affiliate AFUs organized 93 awareness sessions in which more than 7,000 individuals
were approached in various parts of the country. The awareness programs have helped in
reducing communication gap & provide a platform to stakeholders to discuss the issues they
have to face.
4 Exhibition, Melas
AFU conducts such events every year by interacting with a commercial bank deciding the
targeted Group. Before conducting an event at a particular place, the AFU arranges the
meetings between the stakeholders of all the sectors.

5 Seminars/workshops
Seminars and workshops are also conducted by the AFU for the awareness of the stake holders.
6 Seminars & workshops
It is another effective tool for finding more practical ways of efficient use of development
finance& making it compatible with the cultural norms and resource availability of the
respective region.
7 Capacity Building Programs
It also provides the training to the employees of the commercial banks so that they may
understand the techniques and procedures of granting loan. It can be said that these steps are
to build up the experience and capacity of those employees to perform their functions better
than before.
8 Development of linkages with academia
The missing linkages between industry and academia remain one of the reasons behind
inadequate supply of human resources with the required skill set. Therefore, developing
relationships & establishing links with educational and research institutions is much needed as
through these links the educational institutions get oriented about emerging development
finance activities.


Research Activities
It also conducts research activities and carrying sectorial assessment studies to know about the
potential of every sector. It collects regional and/or branch-wise data from Data Warehouse or
DFG Departments for assessing banks performance as well as to study regional trends in
growth and development of SMEs, Micro and Rural Finance.
Monitoring & Evaluation
AFU monitor the targets of agriculture financing as per plans finalized by ACAC (Agriculture
Credit Advisory Committee). Firstly the Targets assigned were Mandatory and those were
finalized by SBP but now Indicative Targets are assigned to Banks by the mutual negotiation
between SBP and Banks
AFU monitor banks performance towards achievement of their regional and branch-wise
targets of development finance using the BSC field offices. It also develops and maintain
province-, region- and district-wise development finance database. This will help us optimally
target our resources to increase outreach of financial services in un-banked/under-banked
areas/sectors.
Liaison with Stakeholders
AFU liaison with Stakeholders and coordination with Regional chiefs and General Managers
of Commercial Banks regarding Development Finance related matters.


Customer facilitation center
AFU also deals with all the Complaints of the customers regarding Commercial Banks. These
complaints are normally of misbehavior and excessive service charges.
Complaint handling Procedure
First of all the customer will have to write an Application to SBP and further he will
have to attach the Copy of his CNIC.
Then AFU will write the letter to the Regional Branch of that Bank and refer that case
to them and further impose them to solve that issue within 7 days.
Then the Regional Branch will address to that Branch about which the complaint have
been filed.
That branch will resolve the matter and get the letter of Satisfaction from that
Customer.
Then the Regional branch will send that letter to the SBP-BSC.

Some Support Functions
Preparation of business plan of local offices
Management of Customer Facilitation Center(Complaint handling)
Management of IBP local center functions


Major Sectors Focused by AFU
Major sectors that are focused by AFU for promotion are
Agriculture
SMEs
Islamic banking
Microfinance
AFU of SBP-BSC (Bank) FSD focuses on all above sectors of all districts of Faisalabad. Each
focus group has its own stakeholders.

Research activities for four sectors
Research activities are done by AFU to measure the potential hidden in the relatively less
famous business sectors like
Citrus Farming in Sargodha Region
Handicrafts of Silawali
Furniture from Chinniot
Power loom Sector of Faisalabad
These research activities are performed in collaboration with universities and other institutes.


Feedback of the Stakeholder
Feedback of the stake holder plays the key role for all the promotions and development
programs because it gives the knowledge how much people understand the concepts of the
financing schemes and financing facilities. Feedback from the stakeholders is also important
to amend and improve existing policies and formation of new policies for the development of
our priority sectors.
Suggestions
SBPBSC should take more attention towards awareness programs because there is still
lacking in the information which could reach properly to those communities who actually
require such development programs.
For resolving the complaints of customers SBP should have to make a sub field unit to solve
the issues of long distance areas.


Deposit account unit
Introduction
The most important Unit or department of State Bank of Pakistan is Deposit Accounts Unit.
Its roles are as prescribed under;
Role of Deposit Accounts Unit
It deals with commercial Banks
Provisions of loans for meeting time and demand liabilities to commercial Banks
(Refinance division of DAU)
It directs the working criteria of commercial Banks
Balances and stock reports preparation
Bank Accounts maintenance
Transferring of funds
Daily closing of Accounts of office.
Closing of Bank daily operations

Scope of Deposit Accounts Unit
The scope of the Unit is very wide and nature of it is very important in the SBP.
It is the large Unit of the Banking sector and its role is most important in the industry
generally its main scope is in these means;
Maintaining Accounts of commercial Banks
Reporting their daily transactions
Their balances standing are checked here


Remittances are transferred from here
Remittances of all commercial Banks
Government remittances also deal here
Employee remittances
Most major portion of State Bank of Pakistan BSC (Bank) is the closing of clean cash
book. Clean cash book is the record of the whole day transactions and their net effect
after receipts and payments.
Receipts & payments of government
Gives net of all receipts & payments through SBP-BSC.
Structure
As per banking Manual-2013, following Units are functioning in DAU:

Deposite
Accounts Unit
Scheduled
Banks
Section
Clearing
Section
Foreign
Currency
Section
Remittances
Section
Miscellaneous
Section

1. Scheduled Banks Section

Current Account section
Current account section deals with commercial banks therefore it is called Bankers bank.
It provides daily statement of accounts to commercial banks for their accounts.
It allows commercial banks to transfer funds from one city to other through T.T.
Every schedule bank is required to maintain an account at field Office of SBP-BSC to perform
and run their operations. There are 37 Current Accounts maintained at Faisalabad and all are
operational.
Opening of Current Account in the name of Schedule Bank
Scheduled banks approach the Office of the SBP BSC (Bank) for opening their branch as
provided in the Scheduled Banks Regulations. The following documents are required to be
submitted to the office of the Bank in connection with the opening of accounts by Scheduled
banks through their regional or Head office.


Current accounts opening requirements
1) Account opening form.
2) Specimen Signature card (S.S card).
3) SBP licensed and permission letter
4) Memorandum and articles of associations.
5) Certificate of incorporation.
6) Certificate of commencement of business.
7) Certificate of incorporation on change of name.
8) National Tax Number.
9) Officers special power of attorney.
10) List of directors.
11) Board resolution
12) Power of attorney in favor of president CEO.

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

Statutory Liquidity Ratio
Commercial Banks are required to keep some fraction of their assets in the form of cash,
treasury bills or other approved securities. This is called Statutory Liquidity Ratio. Every
commercial bank (at Head Office) must have 5% weekly & 4% daily in form of Gold, Dollar
and approved Government securities on time and demand basis as SLR.

Principal Account
Principal accounts of every commercial bank are maintained at HOK. Head Office of
commercial bank maintains its accounts at SBP-BSC HOK.
Subsidiary Accounts
Some branches of commercial Banks also maintain accounts at their regional Offices of SBP
BSC; their reserves are called subsidiary Accounts. If the combination of both the balances is
not fulfilling their reserve requirement then penalties must be imposed on them.
Operation
Inputting of entries in the respective menus.
Authorization of all the above input entries.
Retrieval of Reports of Day Books
Final reports of Other Scheduled Banks
Retrieval of balance statement of National Bank of Pakistan
Inputting of non-Globus instruments received from various sections.
Authorization of various Non-Globus entries emanating from different Units
Issuance of daily Bank balances to Scheduled Banks.

2. Clearing Section

After the establishment of NIFT Clearing system, the role of SBP-BSC Offices has become more
important as all the transactions pertain to Current A/c of all the participating Clearing Banks in
the area are finalized at D.A.U.

3. Foreign Currency Section

In the cases of Foreign Governments and Institutions, instructions for opening current accounts
will be received by the office of the SBP BSC (Bank) from the Finance Department State Bank
of Pakistan. Head Office, Karachi.

4. Remittance Section
It facilitates the movement of funds from one place to another 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-BSC office to out station
Facilitative role for the flow of funds between various centers in the country smoothly
and efficiently.
Employee funds transfer
From employees of one BSC office to other office.


Types of Remittances
The following types of remittances are issued by the offices of the State Bank SBP BSC:

Online Transfers
As and when an application for online transfer is received, the concerned official will
immediately scrutinize it to ensure that:
1. The application has been made in the form prescribed by the Bank
2. All the requisite particulars have been filled in the application form;
3. Rs.1000/ and Rs.100/- per transaction have been recovered on exchange and fax
charges respectively.
4. In case OT is required by a Government Department no exchange will be charged,
Remmittances
Online
Transfer
For Banks only
Mail Transfer
For Employees
Bank Draft
For Employees
Government
Draft
For Govt.
Departments

5. The purpose of remittance should be clearly stated.

Mail Transfers (M.T.)
In case a Mail Transfer is required by an employee, he will apply on the prescribed form.
It facilitates the employees of SBP BSC free of charge. It is the fastest way of fund transfer.
Transfer of funds between the employees of State Bank of Pakistan and its subsidiaries.
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
Example
An employee of SBP-BSC Faisalabad wants to send cash to SBP-BSC Lahore, then he fills in an
application mentioning the name of beneficiary in Lahore and deposit cash, DAU after finalizing
formalities, send fax advice to SBP-BSC Lahore then SBP-BSC LAHORE generates system copy
of payment order and gives it to employee concerned of Lahore Office.
Bank Draft (B.D)
It can be drawn on SBP-BSC or NBP. This is only for staff. An application is filled in and deposit
cash at SBP BSC. Then the drawer SBP BSC gives the B.D to employee and sent advice to the
NBP branch only on which B.D is drawn. That employee receives the cash after presentation of
B.D.


Government Draft (G.D)
Government draft is issued only for Government Departments. All Government accounts
are maintained at SBP-BSC offices. Provincial departments move funds freely with in the
province. If Provincial departments transfer funds to other province, then commission is
charged on prescribed rates. An application is made for submission of Government draft.
Govt. Draft (G.D) is supplied to the departments who apply for G.D. G.D advice is sent to
respective branch of NBP. When G.D is presented the officers NBP branch compare the
G.D amount and other particulars with the record.

5. Miscellaneous Section

Loan and advances
The State Bank is authorized to make loans and advances to Local Authorities, Scheduled and
Cooperative Banks, Federal and Provincial Governments repayable in accordance with the
terms and conditions of the loan against securities specified in the Act. The State Bank has
formulated policies under which advances are granted to Scheduled and Cooperative Banks
against proper securities.

Accounting Procedure of Overdrafts to Banks
Separate overdraft account will be opened in Globus through HOK for each bank utilizing the
facility. Withdrawals from overdraft account will be allowed by means of cheque and will be

restricted to twice a week. Separate cheque books will be issued to each bank for the purpose.
Interest on overdraft accounts will be calculated on the basis of daily products and will be
recovered by debit to the current account of the borrowing bank at the end of each month or at
the time of final repayment of the overdraft whichever is earlier.
Government Treasury Bills Issue
Apart from the floatation of new loans on behalf of the Federal and Provincial Governments
in Pakistan, the State Bank of Pakistan is required to hold periodical auctions of the
Government Securities namely Treasury Bills/Bonds in the manner approved by the
Government. The objective of holding auctions is to raise funds for the Government from the
market.
Treasury Bills auction are held on fortnightly basis by Domestic Markets and Monetary
Management Department whereas bond auction schedule is intimated by the Federal
Government.

Settlement of Auction
On receipt of the realized amount of the Treasury Bills from the successful bidders in response
to the advice issued to the primary dealer, the entries will be passed by the Globus.
A statement showing the Treasury Bills issued and discharged will be sent to the following
through Globus.
1. The Director, Domestic Markets and Monetary Management Department, State Bank of
Pakistan, Karachi.
2. The Director, Finance Department, State Bank of Pakistan, Karachi.
3. Domestic Markets and Monetary Management Department will send the same statement to
Secretary, Ministry of Finance, and Government of Pakistan.

Repo facility against Treasury Bills (3 Days Discounting)
The State Bank provides access to Repo facility against Government of Pakistan Market
Treasury Bills when offered by Scheduled banks maintaining a Current Account as well as
Subsidiary General Ledger Account (S.G.L.A.) with the State Bank.
Open Market Operations may be conducted by State Bank of Pakistan in two ways:
1. Firstly, Outright purchase and sale of Government Securities.
2. Secondly, Repo transactions. (Purchase and ReSale and Sale and RePurchase
Contracts).

Scheme of Advances against Pledge of Bills
In addition to the Demand Promissory Note and Agreement, the bills lodged by scheduled
banks for taking advances will also be accompanied by the certificates signed by the borrowing
bank and the drawer of the bills respectively. The Demand Promissory
Note and Agreement will remain good and valid for a period of 3 years as in the case of
advances against Government Securities.
Advances will be granted after allowing a margin of 5% over the amount of bills tendered.

T.T. /D.D. Discounting Facilities
In addition to the financial accommodation allowed to scheduled banks by way of Demand
Loans, facilities for discounting of T.T.s. /D.Ds. are also made available to them against the
collateral of Government Securities. The Banking Policy and Regulation Department SBP-
BSC fix the limits for discounting of T.Ts. and D.Ds.

Exchange on T.T. /D.D. discounted is charged at the rate of 0.036%. Fax charges at a uniform
rate of Rs.100/are also to be recovered (in case of T.T.) from the bank concerned.
Purchase of Demand Drafts
The offices / branches of the Bank may purchase at par demand drafts, cheques and other
analogous documents payable at sight at places where an office/branch of the Bank is
conducting banking business.
The facility of purchase of demand drafts etc. is restricted to the permanent employees of the
Bank and the cheques so tendered are drawn at a place where there is an office of the State
Bank of Pakistan. It may also be ensured that the employees utilize this facility only for their
bona fide personal purposes and the amount involved should not exceed one month take home
salary of the employee. Cheque should not be drawn on a bank situated in the same city.
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.


Glossary

Balance of Payments
The balance of payments (BOP) is a statistical statement that systematically summarizes, for a
specific time period, the economic transactions of an economy with the rest of the world.

Currency in Circulation
Currency in circulation refers to currency held by public i.e currency outside the banking
system.

Non-Performing Loan
A non-performing loan is a loan that is in default or close to being in default. Many loans
become nonperforming after being in default for 90 days, but this can depend on the contract
terms.

Reserves Assets

Reserve assets consist of those external assets that are readily available to and controlled by
monetary authorities for direct financing of payments imbalance. In BOP, they cover monetary
gold, SDRs, reserve position in the fund, foreign currency reserves and other claims.


References

Employees of each Division in the Finance Department.
http://www.agpr.gov.pk/Images/AccProcess.jpg
http://www.bankofcanada.ca/banknotes/
http://www.ecb.int/stats/html/index.en.html
http://www.sbp.org.pk/
http://www.sbp.org.pk/departments/accounts.htm
http://www.sbp.org.pk/departments/accounts.htm
http://www.sbp.org.pk/reports/annual/arFY10/Vol2/anul-index-eng.htm
www.google.com
www.sbp.org.pk
www.wikipedia.com


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