Banks May Face Heavy Penalties On Issuance of Unverified Notes

Banks will face a heavy penalty equal to 100 times of the value of a forged banknote that are found or received by customers through their Automated Teller Machines (ATMs).

This penalty is part of the Currency Management Strategy of the State Bank of Pakistan (SBP) to ensure the circulation of authentic and verified currency notes in the banking and economic system.

The banking companies have to pay penalties from Rs. 10,000 minimum to maximum Rs. 100,000 on every incidence that shows their negligence. They will be penalized not only over the issuance of fraudulent banknotes but also for the whole process of verification and authentication that they have failed to uphold.

In this regard, SBP has devised a structure of penalties to be imposed on the commercial banks which neglect their responsibilities in processing and verification of banknotes.

Banks may face a penalty of Rs. 100,000 if machine authenticated and sorted cash is not being fed into ATMs.

Commercial banks will face a heavy penalty of Rs. 100,000 from the central bank for issuance of unverified and unauthenticated banknotes to the public from their branches.

A penalty of Rs. 30,000 will be imposed on banks for not surrendering counterfeit banknotes to SBP’s department within 48 hours of their detection along with all particulars and records.

The central bank described this practice as the penalty regime for cash processing functions with the Currency Management Strategy. This new penalty structure will supersede all previous penalty instructions regarding cash management operations of the banks.

All banks are advised to ensure strict compliance with the currency management instructions issued from time to time as any violation thereof would attract punitive action as per the referred penalty structure above.

This measure of the central bank is part of its Currency Management Strategy, which is in the last phase of being implemented by all commercial banks throughout the country.

All commercial banks and microfinance bank have kicked off the verification and authentication of currency notes throughout the country as part of the second and last phase of currency management strategy of the central bank.

Banks will deploy the central bank’s recommended machines for the verification and authentications 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 by installing machines at various branches in 30 cities and districts that circulated tested and authenticated banknotes of Rs 500 and above including Rs 1,000 and 5,000.

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