Académique Documents
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ON
Currency Management Unit & its functions
SBP (BSC) Dera Ismail Khan
Submitted To:
Mr. Mudasir Ahmad
Submitted By:
Muhammad Taous (Qurtuba University)
Muhammad Umair Qureshi (Gomal University)
Sundas Tanveer (Qurtuba University)
ALLAH
THE MOST GRACIOUS
THE MOST MERCIFUL
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Dedicated
To
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ACKNOWLEDGEMENT
A milestone of this nature could never have been possible to achieve without the
support of a galaxy of some truly loving persons. The events and the process leading to
the accomplishment of my objective have given me a realization in depth of immense
blessing of Allah.
Many people have contributed in the successful completion of this internship report. My
great appreciation goes to the whole team of SBP (BSC). They provided me with every
kind of help in the completion of this report. Let me also thank my teachers of Qurtuba
University of Science & information Technology for the knowledge they gave me and
their guidance in every field. I would also like to thanks to respected Supervisor for
his guidance. Last but not the least I would like to thank my parents who provided me
love, support, patience & good knowledge.
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Executive Summary
A sound and stable financial system has a direct bearing on economic growth and
development of country. The State bank of Pakistan (SBP) being the regulator of
banking and financial system has always endeavored to ensure a sound and robust
financial sector capable of efficiently catering to the needs of the public and regulated
institutions.
The document contain Internship report on the Currency Management unit Functions,
how the workload is divided in the Unit between the personnel. What are the functions
of the unit and how they are performed? The issue and exchange functions of the unit.
Receipts of soiled and defective notes their examination process and then the
cancellation of notes. The process for cancelled notes. Supply of fresh notes and coins
to the general public and maintaining the daily record of transactions at State Bank of
Pakistan BSC D.I.Khan.
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TABLE OF CONTENTS
I INTRODUCTION................................................................................ 01
1.1 Historical Background................................................................. 02
1.2 Objectives 03
1.3 Vision Statement......................................................................... 03
1.4 Mission Statement....................................................................... 03
1.5 Functions of SBP......................................................................... 04
1.6 Introduction to SBP (BSC).......................................................... 05
II Departments........................................................................................... 08
2.1 Banking Department. 08
2.2 General Service Unit. 08
2.3 Staff Matter Unit 09
2.4 Internal Monitoring Unit... 09
2.5 Currency Management & Evaluation Department 09
2.6 Divisions Wise Distribution of BSC. 11
2.7 Organogram of DIK SBP (BSC) 12
III Project.......................................................................... 13
3.1 Currency Management Department (CMD).. 13
3.2 Functions of CMD. 14
3.3 Divisions of Currency Management Unit (CMU)... 15
3.4 Major functions perform by CMU 17
IV SWOT Analysis 22
4.1 Strengths... 22
4.2 Weaknesses.. 23
4.3 Opportunities 24
4.4 Threats.. 25
4.5 Recommendations.... 26
Bibliography... 27
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Chapter #1 INTRODUCTION
The State Bank of Pakistan (SBP) is incorporated under the State Bank of Pakistan
Act, 1956, which gives the Bank the authority to function as the central bank of the
country. The SBP Act mandates the Bank to regulate the monetary and credit system
of Pakistan and to foster its growth in the best national interest with a view to
securing monetary stability and fuller utilization of the countrys productive
resources.
1
1.1 HISTORICAL BACKGROUND
Before independence on 14 August 1947, during British colonial regime the Reserve
Bank of India was the central bank for both India and Pakistan. On the 30th of
December 1948 the British Government's commission distributed the Reserve Bank
of India's reserves between Pakistan and India -30 percent (750 M gold) for Pakistan
and 70 percent for India.
The losses incurred in the transition to independence, small amount taken from
Pakistan's share (a total of 230 million). In May, 1948 Muhammad Ali Jinnah
(Founder of Pakistan) took steps to establish the State Bank of Pakistan
immediately. These were implemented in June 1948, and the State Bank of Pakistan
commenced operation on July 1, 1948
Under the State Bank of Pakistan Order 1948, the state bank of Pakistan was
charged with the duty to "regulate the issue of bank notes and keeping of reserves
with a view to securing monetary stability in Pakistan and generally to operate the
currency and credit system of the country to its advantage".
A large section of the state bank's duties were widened when the State Bank of
Pakistan Act 1956 was introduced. It required the state bank to "regulate the
monetary and credit system of Pakistan and to foster its growth in the best national
interest with a view to securing monetary stability and fuller utilization of the
countrys productive resources". In February 1994, the State Bank was given full
autonomy, during the financial sector reforms.
The State Bank of Pakistan also performs both the traditional and developmental
functions to achieve macroeconomic goals. The traditional functions may be
classified into two groups:
1) The primary functions including issue of notes, regulation and supervision of the
financial system, bankers bank, lender of the last resort, banker to Government, and
conduct of monetary policy.
2
2) The secondary functions including the agency functions like management of
public debt, management of foreign exchange, etc., and other functions like advising
the government on policy matters and maintaining close relationships with
international financial institutions.
1.2 Objectives
The state bank of Pakistan is a nonprofit organization. Its main objective is to
manage or maintain the currency supply in country. Increase and decrease in money
supply can create inflation or deflation in country, so these things should be handled
immediately and state bank is doing this.
To transform SBP into a modern and dynamic central bank, Highly professional and
efficient, fully equipped Bank to play a meaningful role, on sustainable basis, in the
economic and social development of Pakistan.
To promote monetary and financial stability and foster a sound and dynamic
financial system, so as to achieve sustained and equitable economic growth and
prosperity in Pakistan.
3
1.5 Functions of SBP
Like a Central Bank in any developing country, State Bank of Pakistan performs
both the traditional and developmental functions to achieve macro-economic goals.
The traditional functions, which are generally performed by central banks almost all
over the world, may be classified into two groups: (a) the primary functions
including issue of notes, regulation and supervision of the financial system, bankers
bank, lender of the last resort, banker to Government, and conduct of monetary
policy, and (b) the secondary functions including the agency functions like
management of public debt, management of foreign exchange, etc., and other
functions like advising the government on policy matters and maintaining close
relationships with international financial institutions.
4
1.6 Introduction to Banking Services Corporation SBP (BSC)
As SBP felt that there is extra burden of workload to perform policy making
functions as well as operational functions the administration established he SBP
Banking Services Corporation (SBP-BSC) was established as a wholly owned
subsidiary of State Bank of Pakistan in January, 2002, under the SBP Banking
Services Corporation Ordinance 2001.
Vision Mission
Regional Offices
The sixteen (16) Field Offices of the Bank are structured into the following three
Regions:-
5
Regional / Field Offices of the Bank typically provide the following Banking
Services:-
6
In addition, for proper and efficient management of the business relating to the issue
of notes / currency, there exist four Currency Issue Circle Offices of the Bank. The
location of these Offices and their geographical limits are as under:
Currency issue
Geographical limits of each circle
circle offices
7
Chapter#2 Departments
8
Budget and expenditure monitoring
Maintenance of Fixed assets
Procurement of the assets of the office and maintain their record
Repair and maintenance of office building and equipments
IMU is responsible to check and authorize all the work to make it flawless
To check the daily record of work done by PAU & DAU
To check the enter and exit time of all the employees
To check the work done by SMU
To check the medical facilities and procurement of assets
To check and authorize the work done by GSU
To assist regional Hub Audit and Annual Audit.
9
Implementation of Clean Note Policy and other currency related policies.
Conducting onsite monitoring of commercial banks and currency chests.
Issuing instructions to commercial banks regarding currency related matters
as issued by SBP or SBP (BSC).
10
2.6 Divisions Wise Distribution of BSC
11
2.7 Organogram of DIK SBP (BSC)
12
Chapter#3 Project
Mission Statement
To establish efficient currency management system by using latest technology from
initial printing to finally destruction of banknotes including curbing of counterfeit
currency.
Vision Statement
Providing securer and better quality banknotes to command respect and trust of our
stakeholders.
Due to increase in Currency in Circulation (CIC) & allied work, a strong need was
arises to separate the policy and strategic arm of currency in to a separate
department.
13
To streamline currency management activities in an efficient and effective manner
across the country. The functions relating to currency management previously dealt
with by Accounts Department of the SBP-BSC was transferred to a newly created
Currency Management Department (CMD) which is fully functional since 7th
August 2007.
Legal framework
In terms of Para 5 b & c of Part II of Banking Services Corporation Ordinance, 2001,
the BSC may transact and carry on all or any of the following functions namely: -
b. The handling of receipt, supply and exchange of bank notes and coins which are
legal tender;
c. The issue, supply, sale, encashment and handling of prize bonds, holding draws
thereof and other savings instruments of the Federal Government of or a Provincial
Government;
14
Monitoring of Chest balances.
Preparation of annual indents for notes and coins keeping in view past consumption
trends and future requirements.
Liasoning with NBP for issues relating NBP chest operations like
Linking/delinking, change in holding capacity, periodic examination etc.
15
2- CHEST OPERATIONS & COMPLIANCE DIVISION
Cash Monitoring On-Site Examination of Banks under SBP Clean Note Policy
Annual Verification of balances of Banknotes, Coins and Prize Bonds held with
SBP BSC Offices
Assessing the need of opening of new field offices on request from Federal /
Provincial Government.
Procurement of plots for rented field offices. Currently held in abeyance on the
orders of Board.
Coordinating with ISTD for development of various MIS reports for BSC head
office and Issue circles / field offices.
16
To facilitate the offices of SBP BSC, commercial Banks and General Public
regarding queries/issues raised in respect of Sales/Encashment/Re-investment of
National Prize Bonds, NSS and other allied issues.
Currency Management Units at field offices perform their functions under the
instructions of Currency Management Department at HOK.
The main functions of Currency Management unit are elaborated as its different
sections as under:-
1. Remittance Management
Overseeing the Currency Operations viz: Supply, Distribution, Withdrawal,
Verification and Cancellation of Notes and coins in accordance with treasury rules
and other applicable law.
Preparing indent for supply of notes and coins to the office and Managing
Inward remittances from issue /supplying office in timely manner.
17
Ensuring and managing collection of soiled notes from commercial banks and
arranging for outward remittances to other office for shredding of cancelled / soiled
notes.
Liasoning with NBP for issues relating NBP chest operations like, change in
holding capacity, periodic examination etc.
Arranging payment of the one window and next day operations cases duly passed
by competent authority and handling appeal cases for the same.
18
To process the rejected notes for destruction after completion of the prescribed
procedure.
ii -To receive forged notes from Police authorities and processing the cases,
iii -To prepare cases for court attendance & prepare and process the cases for
destruction of forged notes & to keep the record of the unit updated.
Promoting mass awareness activities among general public about, forged notes,
security features of currency notes and clean note policy of SBP.
Preparation of annual On Site Examination Plan & Inspection of NBP Chest/ Sub-
chest.
Conducting on site examination of commercials banks & Inspection of NBP Chest
/ Sub-Chest branches, preparation of penalty sheets & submission of cash
monitoring examination reports to HOK and concerned banks.
19
NBP CHEST BRANCHES UNDER SBP (BSC) D.I.Khan
Currency management unit SBP BSC D.I.Khan provide remittance facilities to below
mentioned NBP Chest branches and also conduct examination of these chests :
20
From these chest branches the currency is further circulated in the region where NBP
is working as a chest of SBP.
Further SBP BSC D.I Khan conducts onsite monitoring of commercial banks in
following Districts as per annual approved monitoring plan:
21
Chapter 4 .SWOT Analysis of SBP
SWOT analysis stands for strengths, weakness, opportunities, and threats. SWOT
analysis is careful evaluation of an organizations internal strengths and weakness as
well as its external environmental opportunities and threats.
The overall evaluation of an organizations strengths, weaknesses, opportunities and
threats is called SWOT analysis.
In SWOT analysis the best strategies accomplish an organizations mission by:
1. Exploiting an organizations opportunities and strength.
2. Neutralizing the threats.
3. Avoiding or correcting its weakness.
SWOT analysis is one of the most important steps in formulating strategy using the
organization mission as a context, managers assess internal strengths distinctive
competencies and weakness and external opportunities and threats. The goal is to
then develop good strategies, exploiting opportunities & strengths, neutralizing
threats and avoid weaknesses.
4.1 Strengths
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and insurance of life. These serve as a benefit and competency for the bank and a
source of motivation for the employees.
4.2 Weakness
23
responsibilities, which serves as a demotivation factor for employees performing
above average work.
4.3 Opportunities
24
4.3.5 Growing banking system
Banking is very important now a day due to increase in domestic and international
business worldwide and every businessman keep proper contact with banks. So the
banks can take this opportunity to attract different business by providing attractive
benefits, so in this regard State Bank can motivate different Commercial banks to
increase their banking system.
5.4 Threats
25
as well as customers also face the problems and also cyber crime in todays world is
a big problem.
4.5 Recommendations
Enhanced efforts should be made for Public awareness about the clean note
policy, security features of bank notes.
Black marketing of notes should be fully discouraged in order to avoid it
strict policies should be implemented.
Further efficiency in Remittance Management may be achieved through rapid
transport service with more secured arrangements.
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.
Increase the staff strength of IMU State Bank Pakistan (BSC) D.I.Khan
department to decrease the chance of errors.
Staff strength should be enhanced and professionally qualified persons of
only relevant field should be recruited.
26
Bibliography
www.sbp.org.pk
Siddiqui, A. H. (2012). Banking Law & Practice in Pakistan (3rd
edition.)
https://en.wikipedia.org/wiki/State_Bank_of_Pakistan
www.google.com.pk
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