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Transcript of state bank of pakistan Internship Report
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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
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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 personnelwho 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 Rafiqueand 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 Kashifand 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 Kashifand 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.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
Sr. No. Title
1. Executive summary
2. Introduction
3. Structure of SBP BSC FSD
4. Refinance schemes unit5. Currency management unit6. On-site verification7. Prize bond unit8. Public accounts unit9. Foreign exchange operations department
10. Foreign exchange adjudication department11. Access to finance unit12. Deposit account unit
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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.
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STATE BANK OF PAKISTAN (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 atransformed 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
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
Hierarchy of SBP BSC
Chief Manager
(C.M)
Deputy Chief Manager
(DCM)
Assistant Chief Manager
(ACM)
OG-2
OG-1
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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 Access to finance unit
9 Deposit accounts unit
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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 exportersby
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.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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 SMEIt was introduced to encourage the sponsors of SMEs to modernize their mills/units to
produce quality products.
4. Financing Facility for Storage of Agricultural ProduceThis 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).
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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 exportero 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 beexported, are also eligible to avail finance from banks under the scheme at
pre-shipment stage.
RefinanceScheme unit
Part-1
Pre-shipment
Post-shipment
Part- II
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
Operations of the Scheme under PartI
Finance from banks under Part
I of the Scheme is available to Direct Exporters tothe 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 availfinance from banks under the Scheme at preshipment stage
The Direct or Indirect Exporter shall approach his bank for availing facilitiesunder EFS indicating his financial needs.
After giving finance to exporters the commercial banks make an application to theSBP-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 notexceed 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 theDirect 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 bankconcerned.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
EFS Part-ll
Part-ll is a performance based facility. This type of loan is provided to the exporterthroughout 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 statementIn 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 statementIn this statement SBP-BSC makes the exporters limitfor 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 liabilityis the limit which is formed for ADs by Head office. Indirect Liabilityis 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.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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 daysor 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.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
Calculations for rollover
1.
Average of loans from 1
st
July 1, by adding minimum and maximum loan grantdivide by 2
2. Performance / average*1003. 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/ Insuranceand 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 remittedinto 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.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
Linkage of Overdue Export Proceeds with EFS
To streamline the procedure for availing financing under EFS, a condition ofmaximum 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 showingconsolidated position of overdue export bills outstanding against all bank(s).
If an exporter becomes eligible for EFS by repatriating the proceeds to the level of5% 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 therate prescribed under the Scheme.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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-shipmentthe fine will be charged Paisa 37 per day per Rs.1000orpart 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
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
In case of Short/delayed shipmentthe fine will be charged as Paisa 28 per day perRs.1000or part thereof.
Calculated as:
Short/delayed Shipment = amount of loan*.28*no. of delayed days/1000
For the case of Late/less repaymentthe fine will be Paisa 42 per day per Rs.1000or part thereof.
Calculated as:
Late/less repayment = less paid amount*.42*no. of days in late repayment/1000
For the late submission of shipping documentsthere will be fine of Rs.2000 for thedefaultand Rs.100 per day for each dayof default.
Fine for wrong information and incorrect reporting/ entry in any Statementrequired to be furnished to State Bank of Pakistan will be Rs. 100/ per such wrong/incorrectreported entry.
Fine for nonsubmission of EPRCby 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 EPRCthe fine will be charged as Rs. 100/- per suchmistakenot more than Rs.1000/-.
In all preshipment/postshipment loans cases where it has been noticed thatshipment(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 dayfor the period for which the refinance loanremains 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 perRs.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.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
For any other default by exporter/bankthe fine will be charged at the rate ofPaisa37 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 perwrong entry.
In case of excess availmentthe fine will be charged as paisa 37 per day perRs.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.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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
Currencymanagmentunit
Remittances
Cash monitering and examination unit
Fresh Cash issuance
Forged notes processing
Claim counter/Clearly payable notes
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
(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 BranchNBP 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 BranchNBP 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 capacityIf 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.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
Cash below from its holding capacityIf 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.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
(B) Cash Monitoring & Examination UnitOperations
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 noteso Automation of cash processing activitieso Discontinuation of the practice of stapling banknotes has all.
SBP-BSC issued instructions to commercial banks to sort out banknotes into issuableand 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.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
(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.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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 isaccepted 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 tothe claimant that the note has been rejected.
The rejected notes are kept for a period of 6 months. The claimant can make anappeal 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.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
One Window Operation
Denominations of Rs.10, 20, 50, 100 are presented over the counter then payment is made onthe 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.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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. ExampleNSO etc.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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 ALONGWITH CHALLANFORM
CASHDEPARTMENT
INPUT/
AUTHORIZATION
TICKING WITHSYESTMATICREPORT IN PAU
PREPARATION OFREPORTS &ABSTRACTVOUCHERS
TRANSFER OFPAYMENT TOTREASURER
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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)
CentralII (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)
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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.
BANKCHEQUE
PRESENTEDBY NIFT
SCURITNINGOF
INSTRUMENT
INPUTTING/
AUTHORIZATION
&
PASS WITH LIMIT
TICKINGINSTRUMENT
AFTERVERIFICATION
ABSTRACTPREPARATION
DESPATCHVOUCHERS
TORESPEFTIVETREASURER
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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 1st January April July October
750 15th January April July October
7500 1st February May August November
25000 1st February May August November
1500 15th February May August November
40000 1st March June September December
200 15th March June September December
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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 3rdprizes of Rs100, 200, 750, 1500.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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 andprizes of Rs.7500, 15000, 25000, 40000.
The validity period of the winning prize to be drawn is 6 years from draw afterthat the person cannot claim the winning amount.
Verification of Denominations
Rs.100, 200, 750, 1500, 1stand 2ndprizes signed by OG2, ACM and DCM
Rs.7500, 15000, 25000, 40000 third prizes signed by OG2,DCM and ACM
Rs.40000 1stprizes Rs.7500, 15000, 25000, 400002ndprize signed by the OG2, ACM,
DCM, & CM
Form PB-23
ID card of theclaimant
Origional/photocopy of bond
Directly payment toclaimant
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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 CertificateThe 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.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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 PostOffice (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)
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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 aredone annually (any fiscal year).
The onsite examination team verifies and checks all the documents on which the loanhas been refinanced already
After the visit the team whose team leader is ACM made the onsite verificationreport, which contained all the irregularities, misreporting, late shipment/short
shipment and details of fine.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
Ways of Onsite Verification
The concerned SBP Office will undertake random onsite checking of refinance casesat banks and will examine the entire documents. Verification team of SBP BSC Officeswill 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 theverification 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 BSCoffice will conduct onsite verification of EE-1/EF-1 statements and relevant documentsduring 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
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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
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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
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
Foreign Exchange Operations DivisionIntroduction
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
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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 OverdueDLTL section
MiscelleneousImport/export
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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 Rwhile 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 recordedon E4/P4 Schedule.
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STATE BANK OF PAKISTAN (BSC) FAISALABAD
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 redcolor.
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.
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Procedure for Filing the Complaint against the Exporter
When bill becomes overdue and case is referred to adjudication, we have a format oflaunching 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 tillthe 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:
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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 ProcessedFabric
2% on Home Textile
3% on Garments
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Moreover, if SBP find any discrepancy, forgery or any other fault then it will imposethe 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.
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2. Change Of Buyer &Discount
If exporter has to change the Buyer then again permission would be taken from the SBPalong with the reason of the refuse from the previous importer. The documents required
would be:
Exporters Request
ADs Forwarding letter 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 casesSometimes 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 PaymentAccording 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
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ADs Forwarding letter 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 JewelryExport 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 InvoiceIn case of import of machinery
Request letter by the owner Forward Letter/ contract Performa invoice ( Expenses+ Fault+ Repairing Time)
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1) Establishment of L/C
If there comes any amendment in the payment clauses of the L/C then it must beapproved 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 ADs Forwarding letter L/C Copy Revised Contract Correspondence between Importer/Exporter.
2) Advance Payment for importsAdvance payments based on the following documents:
Contract basis (up to $10,000 advance payment allowed)
LC basis (100% advance payment allowed)
3) Excess paymentPayment 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.
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4) Bank guarantee for Umrah services
It provides services for hajj & Umrah to travelling agents that are registered by ministryof Saudi Arabia religious affairs.
5) Re-export of imported goodsFor 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.
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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 butproceeds 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
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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.
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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 ExchangeRegulation Applet Board, Karachi.
Usually the applet board returns the case to adjudication department for reviewing the decision.
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TAYYEBA BASHIR (University of the Punjab) Page 77
Access to finance unit
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 F inance 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.
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Reorganization of DFSD
Development Finance Group (DFG) was established in SBP and simultaneously DFSDand 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 havebeen 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 aboutthe potential of every sector.
AFU liaison with Stakeholders and coordination with Regional chiefs and GeneralManagers of Commercial Banks regarding Development Finance related matters.
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Core functions of AFU
1 Focus Group MeetingFocus 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 theRepresentatives 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 financeOne 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, MelasAFU 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.
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5 Seminars/workshopsSeminars and workshops are also conducted by the AFU for the awareness of the stake holders.
6 Seminars & workshopsIt 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 ProgramsIt 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 academiaThe missing linkages between industry and academia remain one of the reasons behindinadequate 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.
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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 orDFG 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.
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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
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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 stilllacking 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 solvethe issues of long distance areas.
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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 operati