All commercial and microfinance banks have kicked off the process of verification and authentication of currency notes throughout the country as part of the second phase of currency management strategy of the central bank.
According to the second phase prescribed by State Bank of Pakistan (SBP), these banks will deploy machines recommended by SBP for the verification and authentication of all banknotes across the country and ensure circulation of tested currency notes by January 02, 2018.
The commercial banks successfully implemented the first phase of the strategy in which these institutions installed machines at various branches in 30 cities and districts and circulated tested and authenticated banknotes of Rs 500 and above including 1,000 and 5,000 notes.
Now, the next phase will be implemented across the country for all denominations of banknotes till the deadline of January 02, 2018.
Currency Management System
The deployment of machines at various branches of different commercial banks is the part of the strategy “Currency Management Strategy” set by the central bank in consultation with Pakistan Banks Association.
The central bank suggested 11 machines for checking out currency notes which are mainly of Chinese, Japanese, Korean and German origin.
Commercial and microfinance banks are advised to finalize up to a maximum of three types (models) of machines that meet the central bank prescribed sorting/authentication standards of the currency notes of different denominations.
Resultantly, the automation of cash management function is being carried out in the banking industry to ensure availability of machine-authenticated good quality banknotes to the general public.
Objectives of Strategy
The strategy is aimed at improving supervision and regulation of commercial banks. It also falls on cash processing centers/houses for assuring good quality bank notes in circulation and combating counterfeiting. The goal is to introduce modern, reliable and easily recognizable security features in banknotes.
The objectives are being achieved in a phased manner in coordination with all key stakeholders including commercial banks. To this effect, the SBP has already initiated the process for procuring high speed banknotes sorting and authentication machines as well as medium sized desktop banknotes sorters.
For effective implementation of this strategy, commercial banks will also have to streamline their prevailing currency management processes and automate the same in line with international best practices.
Besides, the central bank issued instructions to banks aimed at ensuring issuance/disbursement of machine-authenticated genuine and fit banknotes by banks through their branches/ATMs, promoting interbank cash exchange/trade, acceptance of fit/re-issuable banknotes by SBP-BSC only as a last resort against a service charge, and eliminating redundancies in the existing cash operations of banks and promoting clean notes culture in the economy .