sbpbsc internship report abdul baseer-

Internship Report SBPBSC Summer Internship Program 2015

By: Abdul Baseer

July 2015

1 SBPBSC Internship Report

Executive Summary

The document contains internship report on the Treasury Cash Unit procedures how the work load is

divided in the department between the personnel. What are the functions of the unit and how they are

performed? The issue and exchange function of the unit, opening of office and vault. Receipts of soiled

and defective notes their examination process and then the cancellation of notes. The process for

cancelled notes and sell mechanism. Supply of fresh notes and coins to the general public and

maintaining the daily record of the transactions at the State Bank of Pakistan BSC North Nazimabad.


Acknowledgment

I place on time gratitude to my Internship Coordinator Madam Saira Shahzad, Treasury Cash

Officer Mr. Tahir Mehboob and other people of have helped me out in the completion of this

Internship Report.


Table of Contents Vision of State Bank of Pakistan: .................................................................................................................. 4

Mission of State Bank of Pakistan: ................................................................................................................ 4

History of State Bank of Pakistan: ................................................................................................................. 4

Banking: ........................................................................................................................................................ 5

Facilities: ....................................................................................................................................................... 6

Governor: ...................................................................................................................................................... 7

Central Board of Directors: ........................................................................................................................... 8

State Bank & Subsidiaries: ............................................................................................................................ 8

SBP Banking Services Corporation (SBP BSC): ............................................................................................... 8

Vision of SBPBSC: ........................................................................................................................................ 10

Mission of SBPBSC:...................................................................................................................................... 10

Field Offices:................................................................................................................................................ 10

SBPBSC North Nazimabad: .......................................................................................................................... 10

Core Functions: ........................................................................................................................................... 11

Support Functions: ...................................................................................................................................... 13

Special Functions: ....................................................................................................................................... 13

Treasury (Cash) Unit: .................................................................................................................................. 14

Hierarchy of Unit: ........................................................................................................................................ 15

Issue and Exchange Branch: ........................................................................................................................ 16

Working strength of treasury (cash) unit: ................................................................................................... 16

Functions: .................................................................................................................................................... 16

Vaults: ......................................................................................................................................................... 17

Counters: ..................................................................................................................................................... 18

Box Balances: .............................................................................................................................................. 19

Evening Collection: ...................................................................................................................................... 19

PAD Box: ...................................................................................................................................................... 20

Vault Closing: .............................................................................................................................................. 20


Introduction

Vision of State Bank of Pakistan: To transform SBP into a modern and dynamic central bank, highly professional and efficient,

fully equipped to play a meaningful role, on sustainable basis, in the economic and social

development of Pakistan.

Mission of State Bank of Pakistan: To promote monetary and financial stability and foster and financial system, so as to achieve

sustained and equitable economic growth and prosperity in Pakistan

History of State Bank of Pakistan: 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 30 December 1948 the British

Government's commission distributed the Reserve Bank of India's reserves between Pakistan and

India -30 percent (750 Mgold) for Pakistan and 70 percent for India.

The losses incurred in the transition to independence were 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

1956was 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 country’s productive resources". In February 1994, the State

Bank was given full autonomy, during the financial sector reforms.

On January 21, 1997, this autonomy was further strengthened when the government issued three

Amendment Ordinances (which were approved by the Parliament in May 1997). Those included

were the State Bank of Pakistan Act, 1956, Banking Companies Ordinance, 1962 and Banks

Nationalization Act, 1974. These changes gave full and exclusive authority to the State Bank to

regulate the banking sector, to conduct an independent monetary policy and to set limit on

government borrowings from the State Bank of Pakistan. The amendments to the Banks


Nationalization Act brought the end of the Pakistan Banking Council (an institution established

to look after the affairs of NCBs) and allowed the jobs of the council to be appointed to the Chief

Executives, Boards of the Nationalized Commercial Banks (NCBs) and Development Finance

Institutions (DFIs). The State Bank having a role in their appointment and removal. The

amendments also increased the autonomy and accountability of the chief executives, the Boards

of Directors of banks and DFIs.

The State Bank of Pakistan also performs both 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- 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.

The non-traditional or promotional functions, performed by the State Bank include development

of financial framework, institutionalization of savings and investment, provision of training

facilities to bankers, and provision of credit to priority sectors. The State Bank also has been

playing an active part in the process of islamisation of the banking system.

Banking: The State Bank of Pakistan looks into a lot of different ranges of banking to deal with the

changes in economic climate and different purchasing and buying powers. Here are some of the

banking areas that the state bank looks into;

1- State Bank’s Shariah Board Approves Essentials and Model Agreements for Islamic

Modes of Financing

2- Procedure for Submitting Claims with SBP In Respect of Unclaimed Deposits Surrendered By

Banks/Dfis.

3- Banking Sector Supervision in Pakistan

4- Micro Finance

5- Small Medium Enterprises (SMEs)

6- Minimum Capital Requirements for Banks

7- Remittance Facilities in Pakistan


8- Opening of Foreign Currency Accounts with Banks in Pakistan under new scheme.

9- Handbook of Corporate Governance

10- Guidelines on Risk Management

11- Guidelines on Commercial Paper

12- Guidelines on Securitization

13- SBP Scheme for Agricultural Financing

Facilities: Agriculture credit

Audit

Banking Inspection

Banking Policy & Regulations

Banking Supervision

Corporate Services

Economic Analysis

Financial Monitoring Unit

Monetary Policy

Research

Statistics and Data Warehouse

Exchange Policy

Human Resource

Information Systems & Technology

Islamic Banking

Legal Services

Library

Payment System


Real Time Gross Settlement System (RTGS System)

Small and Medium Enterprises

Training and Development Department (TDD)

Treasury Operations

Strategic & Corporate Planning

Microfinance

Pakistan Remittance Initiative

Governor: The principal officer of the SBP is the Governor. The current Governor of State Bank of Pakistan

is Mr. Ashraf Mahmood Wathra

.1. Zahid Hussain, 10-06-1948 TO 19-07-1953

2. Abdul Qadir, 20-07-1953 TO 19-07-1960

3. Shujaat Ali Hasnie, 20-07-1960 TO 19-07-1967

4. Mahbubur Raschid, 20-07-1967 TO 01-07-1971

5. Shahkur Ullah Durrani, 01-07-1971 TO 22-12-1971

6. Ghulam Ishaq Khan, 22-12-1971 TO 30-11-1975

7. S. Osman Ali, 01-12-1975 TO 01-07-1978

8. A G N Kazi, 15-07-1978 TO 09-07-1986

9. V.A. Jaffrey, 10-07-1986 TO 16-08-1988

10. I.A. Hanfi, 17-08-1988 TO 02-09-1989 (first term), 01-09-1990 TO 30-06-1993 (second

term)

11. Kassim Parekh, 05-09-1989 TO 30-08-1990

12. Mohammad Yaqub, 25-07-1993 TO 25-11-1999

13. Ishrat Husain, 02-12-1999 TO 01-12-2005

14. Shamshad Akhtar, 02-01-2006 TO 01-01-2009

15. Syed Salim Raza, 01-01-2009 TO 02-06-2010


16. Yasin Anwer(acting), 02-06-2010 TO 08-09-2010

17. Shahid H. Kardar, 08-09-2010 TO 18-07-2011.

18. Yaseen Anwar, 20-10-2011 TO 31-01-2014

19. Ashraf Mahmood Wathra, 31-01- 2014 TO Present

Central Board of Directors: Dr. Waqar Masood Khan

Mr. Mehmood Mandviwalla

Mr. M. Nawaz Tiwana

Mr. Iskander Mohammed Khan

Mr. Khawaja Iqbal Hassan

Mr. Muhammad Hidayatullah

Mr. Zafar Masud

Miss. Sahar Z. Babar

State Bank & Subsidiaries:

SBP Banking Services Corporation (SBPBSC): The Banking Services Corporation (BSC), being an operational arm of SBP, continued to further

improve its service delivery mechanism in an automated environment. The SBP-BSC undertook

various initiatives to better discharge its core responsibilities assigned in the SBPBSC Ordinance

2001. The Bank aggressively pursued a talent management strategy with focused approach on

recruitment and selection. The process started with the induction of 24 cash officers for the field

State Bank of Pakistan

NIBAF

Banking Services Corporation (BSC)


offices of Muzaffarabad and D.I. Khan to meet their specific needs. The Bank’s Board also

approved a management trainee scheme (OG-2) titled ‘Young Professionals Induction Program’

(YPIP) to induct young officers on regular basis. Further, realizing the need for supportive and

capable middle management to steer the reform process, the Bank advertised OG-3 level

positions. To improve the skill sets of existing staff, training opportunities were provided. Also

the use of IT and Globus in BSC has improved timing in service delivery. For ensuring effective

internal controls in an automated environment, risk register, system based check lists have been

introduced in some areas. The remaining areas of operations risk registers are developed on a fast

track basis.

Besides its core responsibilities, BSC with its enhanced mandate in line with the new vision for

its 16 field offices played a significant role to make them focal points for dissemination and

implementation of SBP policies/initiatives. As a result, during FY10 this not only helped to

improve financial awareness but also resulted in healthy feedback from stakeholders.

A number of projects are completed to improve physical infrastructure including renovation and

refurbishing of various floors of BSC head office and its field offices to uplift the face of State

Bank of Pakistan and to provide efficient services in a better working environment.


Vision of SBPBSC: To develop SBP-BSC into a dynamic and efficient organization equipped with requisite

technology human resource capable of extending sustainable support to the SBP in achieving its

objectives.

Mission of SBPBSC: To provide excellent banking and financial services to stakeholders besides ensuring

implementation of SBP policies in order to command their trust and respect.

Field Offices: There are 16 field offices of State Bank of Pakistan Banking Services Corporations.

1. Karachi

2. Lahore

3. Peshawar

4. Quetta

5. Rawalpindi

6. Islamabad

7. Sialkot

8. Faisalabad

9. Multan

10. Hyderabad

11. Sukkur

12. D I Khan

13. North Nazimabad

14. Muzafarabad

15. Bhawalpur

16. Gujrawala

SBPBSC North Nazimabad: The State Bank of Pakistan Banking Services Corporation (SBP BSC) North Nazimabad,

Karachi, has set up Customer Facilitation Centre to ensure smooth and uninterrupted functioning

of Automated Teller Machines (ATMs) of commercial banks, disbursement of loans and

advances, facilitates inter-bank settlement system and deals in prize bonds in the District Central,

Karachi.


Core Functions:

Treasury (Cash) Unit:

Sale / Encashment of Prize Bonds / Payment of Prize Money claims

Sale / Encashment / Reinvestment / Payment of profit on SSC and DSC schemes.

Collection of revenue on behalf of Central, Provincial Govt, local Govt. Authority, Banks

and SBP BSC field Offices etc.

Issuance / Exchange of all denominations of Currency Notes.

Exchange of all denominations of clearly payable defective / claim Notes.

Issuance / Exchange of all denominations of Coins.

All type of payments /Receipts from / to employees.

Banking:

Deposit Accounts Unit

Compiles all transactions, executed in the Office and manage to send information to BSC

HOK.

Issuance of Pay orders, M.T, B.D & D.D.

Manage Retired Employees Fund Scheme.

Maintain Current A/Cs and Government Accounts.

Preserve record of mandatory accounts etc.

Public Accounts Unit

Collect Revenue on behalf of Central / Provincial Govt. & local Govt.

Make Payments on behalf of Government.

Try (Cash) Banking Prize Bonds

National Saving Scheme

Currency Management


Keep close liaison with Accountant General, District Accounts/Treasury Officers and

help in reconciliation of Government payment receipt accounts.

Zakat collection (Central VIII)

Preserve record of all pertinent accounts.

Prize Bonds Unit:

P.B. local Govt. A/C (Accounts/Payment)

Preserves sale / encashment record of fresh / reissue Prize Bonds and defective Prize

Bonds.

Prepare lists of unsold reissuable Prize Bonds numbers (PB-35), get duly audited and

preserves it in safe custody of Chief Manager before the draw fall on such Prize Bonds.

Prepare lists of all retained Prize Bonds.

Taking of prize money from the Prize Bonds kept in the custody of Bank and affording

credit of the amount of Prize Money of Prize Winning Bonds to Government.

Prize Money Unit

Entertain Claims for Prize Money above Rs.1000/-.

Maintenance of record of Prize money of all denominations Prize Bonds.

National Saving Scheme:

Special Savings/Defense Savings Certificates Unit

Sale / Encashment / Reinvestment / Payment of profit of SSC and DSC.

Deduction of Zakat (CZ-50) & with holding Tax on SSC / DSC.

Currency Management Unit:

Issuance of Currency Notes and Coins.

Collects / dispatches remittances from / to Commercial banks / SBP BSC Offices

Entertain claim notes cases.

Preserve all pertinent record of balances up to date.


Support Functions:

Special Functions:

Human Resource Management

Loan/Advances

Procurement

Audit

•Pre audit / Post audit

•Compliance / Follow up

Security

•Bank Premises

•Hostels / Ground

Engineering

•Maintenance

•Contract / Agreement


Unit Details

The unit described in this report is Treasury (Cash) Unit. The duties are descried the way they

are being performed by the working unit in general.

Treasury (Cash) Unit: The Treasury (Cash) Unit is placed in immediate charge of a Currency Officer who is

responsible to the Bank for the full management of the Issue & Treasury (Cash) Unit and for the

strict observance of all rules and orders applicable to the working of Issue Department as laid

down in Issue Department Manual or issued by SBP from time to time. He should be particularly

careful to apply all the checks which have been prescribed for ensuring the safe custody and

integrity of the balances and the correctness of the daily accounts. It is the duty of the Currency

Officer to pay frequent visits to the public counters and the halls where notes or coins are being

examined and to see that work is carried on properly and efficiently as contemplated in the

Manual and without inconvenience to the public or any wastage of Staff.

Treasury (Cash) Unit

Issue Branch Exchange Branch


Hierarchy of Unit:

ACM (Cash)

Senior TO

TO

ATO

Senior Assistant

Assistant

Seal Man Vault Peon


Issue and Exchange Branch: The two main branches of the Treasury (Cash) Division/ Unit in an office of the SBP BSC are

Issue and Exchange Branches.

Issue Branch attends to

• The receipt, safe custody and issue of fresh notes to the Exchange

• Branch and currency chests within the circle as also to other circles;

• The receipt and disposal of non-issuable notes from chests under the circle;

• The taking over from the Exchange Branch of cancelled notes pending verification.

Exchange Branch deals with

• The exchange of notes and coin over the counters.

• The examination of incoming remittances of non-issuable notes.

• The receipt and examination of inward coin remittances.

• The dispatch of remittances of fresh & issuable notes, coin and small coin.

• The cancellation of notes received and examined in the office.

• Small Coin Depot transactions and Government Stock of Surplus Rupee Coins.

• The exchange of small coin & un-current coins and other transactions between the

Banking and Issue Departments.

Working Strength of Treasury (Cash) Unit:

Functions: • Sale / Encashment of Prize Bonds / Payment of Prize Money claims

Grade Strength

OG-3 01

TO 18

ATO 21

Senior Assistant 05

Clerk Cash 05

Vault Peon 09

Total Strength 59


• Sale / Encashment / Reinvestment / Payment of profit on SSC and DSC schemes.

• Collection of revenue on behalf of Central, Provincial Govt, local Govt. Authority, Banks

and SBP BSC field Offices etc.

• Issuance / Exchange of all denominations of Currency Notes.

• Exchange of all denominations of clearly payable defective / claim Notes.

• Issuance / Exchange of all denominations of Coins.

• All type of payments /Receipts from / to employees.

Vaults: Following vaults are in the SBPBSC North Nazimabad.

Prize Bond Vault

This vault holds the prize bond which are not yet issued to the general public and also the prize

bonds that are being cashed by the general public on the counters.

Exchange Vault

This vault contains the notes that are in the circulation for the general public, the notes that are

being exchanged for small or big denomination are kept in this vault.

Fresh Note Vault

This vault holds the notes that are not in the circulation, it only contains the fresh note currency.

Once the notes are withdrawn from this vault than it cannot be kept again in the vault it should

be transferred to the exchange vault.

Prize Bond

Vault

Exchange

Vault

Fresh Note

Vault

Bonded

Note Vault


Counters: The following counters are available in the banking hall of the SBPBSC North Nazimabad for

entertaining the general public.

Defective Note Counter

This counter entertains the general public by exchanging the defective notes and giving them

fresh or re-issuable notes to anyone who appears on the counter. There is only one counter for

this purpose in the hall.

Exchange Note Counter

This counter entertains the general public by exchanging the denomination of the notes. For

example people bring notes with big denominations and gets notes of small denominations.

There is only one counter for this purpose in the hall.

Coins Counter

This counter facilitates the general public by providing them coins against the exchange of notes

or providing notes against of coins. There are two counters one is for receipts and other is for

payments.

Prize Bond Encashment Counter

This counter entertains the general public having bonds and willing for encashment of the face

value of their bonds. The counter provides cash against the bonds at any time one appears on the

counter. There is one counter for this purpose in the hall.

Prize Bond Sells Counter

This counter entertains the general public by selling them bonds of different denominations.

There two counters for this purpose, first counter sells the Rs. 100,750,15000 and 40000

denominations’ bonds and the second counter sells Rs. 200, 7500, 1500 and 25000

denominations’ bonds.

Government Challan Counter

This counter entertains the general public by receiving the tax on the behalf of FBR from them

and challans.

Fresh Notes Counter

This counter facilitates the general public when the Eid ul Fitr and Eid ul Azha in about to come.

The public requires fresh note for the purpose for giving eidi to children therefore the SBPBSC

provides the fresh notes on the time.


Box Balances: Following are the box balances at the back office of the Treasury (cash) Unit in the SBPBSC

North Nazimabad

Exchange Box

This box contains the notes that are being used for the purpose of exchange on the counters, the

officer keeps the box in his custody and provide notes to the counters as per requirement.

Banking Box

This box contains the notes that received from the general public as payment of government

challans, saving certificates and prize bonds.

Prize Bond Box

This box specially contains the notes that are received from the sales of prize bonds to the

general public.

Evening Collection: At the end of the day a Treasury Officer nominated as Incharge Evening Collection for the

purpose shall examine the unspent balance of all Treasury Officers handling each counter in

Prize Bond Vault Exchange Vault Fresh Note Vault

Prize Bond Box Exchange Box Fresh Note Box

PB Encashment

PB Sales Counter

Defective Counter

Coins Counter

Exchange Counter

Govt Challan

Fresh Note Counter


detail. For the purpose of this verification he will be assisted by Tellers who should recount the

full packets in the immediate presence of the Incharge Evening Collection and put their dated

signatures on the front of the first and back of the last note of the packet. Full packets of Rs.100

and above shall be checked by the Incharge Evening Collection by clip system. Chit packets of

all denominations shall be counted by him in detail. Thereafter, the individual Treasury

Officers’ balances shall be combined by the Incharge Evening Collection so that only one chit

packet of each denomination in each category remains. The combined balance shall then be

conveyed in a separate box to the concerned Vault by him. The Vault Officers shall also at the

close of the day, verify the balances by packets and bundles and count the chit packets, if any, in

detail.

PAD Box: At the end of the day all amounts must be rounded to Rs. 5000 therefore this box is used the

amount that excess in the rounding is kept in this box for the rounded purpose of the next day.

Vault Closing: The balances are done then the box balances are transferred to the vaults in the custody of the

ACM (Cash) and ACM (IMU) both. They both have to sign the report generated by the Globus

System so that the next day balance is prepared.

Examination Halls In examination halls as discussed above the balances are examined in different manner such as

examination under special procedure, sorting of Notes into uninsurable and reissue able notes, as

also examination for passing of defective notes etc.


Recommendation

These recommendations are not only limited to the unit discussed in this report, they are for the

whole bank:

Use of extra power energy.

The bank is using old type of tube lights in the premise. It can be replaced with LED lights

strips. They are currently using 40watts and they are around 40 in number in one corner of

the premise. Besides the LED lights single strip can be used in the whole corner it consumes

only 20 watts. It can save a handsome amount of energy.

Use of old computer equipment.

The bank is using outdated computer systems. They are using dual core or quad core

processor computers in the premise. They are operating windows 7 which is the loadiest

operating system. It can also a solution if Win XP is installed on these PCs it can be runned

more efficient than Win 7. Because it produces customer frustration long rush on the

counters.

Fresh note dealers.

There a lot of people out there in the market making black money through the assets of SBP

this is not legal. Therefore it must be discouraged by bringing electronic use. It can be linked

with the NADRA smart cards so that people at the time of Eid-ul-Fitr and Eid-ul-Adha can

easily withdraw fresh notes through ATM machines located in there locality so the chances

of being robbed can also be minimized and dealership also. But the SBPBSC will be required

to make sure the flow of fresh notes to the bank branches.

These are the lagging points that I observed in my six weeks Internship Program in the

SBPBSC North Nazimabad. I hope if they are employed the bank will operate more efficient

and effective than before.

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