state bank of pakistan Internship Report

8/12/2019 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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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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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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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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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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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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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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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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Hierarchy of SBP BSC

Chief Manager

(C.M)

Deputy Chief Manager

(DCM)

Assistant Chief Manager

(ACM)

OG-2

OG-1


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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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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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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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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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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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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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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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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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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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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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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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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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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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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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(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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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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(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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(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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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

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