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State Bank of Pakistan

ACADE
MIC
REPOR
T

STATE BANK OF
PAKISTAN
Prepared By:
Amber Memon
Ahsan Ali Soomro
Pareesa Junejo
Iqra Lagari
Seharzish Riaz
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State Bank of Pakistan

Table of Contents
Acknowledgment....................................................................................3
Executive Summary................................................................................4
1. Introduction.......................................................................................5
1.1 History/Background........................................................................5
2. Overview of Organization....................................................................5
2.1 Vision............................................................................................6
2.2 Mission..........................................................................................6
2.3 Core Values...................................................................................6
2.4 Goals.............................................................................................6
3. Organizational Structure.....................................................................7
4. Departments of SBP...........................................................................7
4.1 Deposit Accounts Dept...................................................................7
4.2 Currency Management Dept...........................................................8
4.3 Prize Bond and Saving Certificate Dept...........................................8
4.4 Internal Monitoring Dept................................................................8
4.5 Public Accounts Dept.....................................................................9
4.6 General Services Dept....................................................................9
6. SWOT Analysis................................................................................10
6.1 Strengths....................................................................................10
6.2 Weaknesses.................................................................................10
6.3 Opportunities...............................................................................10
6.4 Threats........................................................................................10
7. Suggestions & Recommendations......................................................10
8. Conclusion......................................................................................11
9. References.......................................................................................11

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Acknowledgment
All praise to Allah, the most merciful, kind and beneficent, and the source
of all knowledge, wisdom within and beyond my comprehension. He is
the only God, who can help us in every field of life. All respect and
possible tributes goes to my Holy Prophet Mohammad (SAW), who is
forever guidance and knowledge for all human beings on this earth.
I am greatly indebted to my learned teachers, who have given me this
report. This report reflects the knowledge which I have gained from my
valuable teachers.

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Executive Summary
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 no. 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 are the
main are public account department, deposit account department,
currency management department, internal monitory department, prize
bond and saving certificate deparment, general services department.
Public account department perform many operations. It collects and
gives payments on behalf of government. It also performs clearing. It
receives checques or sends checques 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 in the city. General
services department perform services like employee salaries, employ
loan, NIBAF, etc. It provides all facilities to general public which it can to
help or facilitate them.

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1. Introduction
1.1 History/Background
State bank of Pakistan is the central bank of Pakistan. It was established
in 1948. Initially state bank of Pakistan was entrusted with the task 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" (SBP order,
1948). The headquarters are located in the financial capital of Pakistan,
Karachi with its second headquarters in the capital, Islamabad.
In financial sector reforms of 1994 State Bank of Pakistan got full
autonomy. On January 21, 1997 this autonomy was further strengthened
when the government issued three Amendment Ordinances. 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
(Wikipedia, 2010). Currently its primary functions include regulating
banking sector, maintenance of public accounts, devising monetary
policy, management of public debt, issuance of currency notes, and
maintaining inflation.
State Bank of Pakistan Banking Services Corporation SBP-BSC was
established in 2002 in order to perform operational functions of SBP (SBP
website). SBP-BSC is subsidiary of State Bank of Pakistan having 16
offices in major cities of the country and its key functional and
operational areas include currency management, foreign exchange
operations and adjudication, export finance scheme, payment &
settlement systems, and banking services to the government. While
State Bank of Pakistan performs the important function of policy making,
SBP-BSCs handle most of the operational areas (SBP website).

2. Overview of Organization
As we all know that state bank of Pakistan is a nonprofit making
organization. Its main objective is to manage or maintain the currency
supply in country. Increase and decrease in money supply can create
inflation or deflation in country, so these things should be handled
immediately and state bank is doing this. The mission and vision of SBP
is as under.
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2.1 Vision
To develop SBP-BSC into a dynamic and efficient organization equipped
with requisite technology and human resource capable of extending
sustainable support to the State Bank of Pakistan in achieving its
objectives (SBP website).
2.2 Mission
To provide excellent banking and financial services to stakeholders
besides ensuring implementation of SBP policies in order to command
their trust and respect.
2.3 Core Values
Highest standards of Integrity.
Institutionalizing teamwork and performance culture.
Excellence in service.
Advancement of skills for tomorrows challenges.
Awareness of social and community responsibility.
Value creation for all stakeholders.
2.4 Goals
To enhance profitability and maximization of SBP share through
increasing leverage of existing customer base and diversified range of
products.
Excellence in Direction
Excellence in Growth
Excellence in Performance
Excellence in Management
Excellence in Achievement
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3. Organizational Structure
In State Bank of Pakistan, the head is called Chairman or President of
the Bank. And after President there is Five Broad of Directors. SBP has
Seven Departments which control the working of the Divisions, Wing,
Section and Regional of the state bank of Pakistan.
Chairman
Chairman

Presidents
Presidents
Secretariat

Board
of
Board of
Directors

Secretary
Secretary
Board
Board of
of
Directors
Directors
Deposit
Accounts
Accounts
Dept.
Dept.

Currency
Managemen
Managemen
tt Dept.
Dept.

Public
Accounts
Accounts
Dept.
Dept.

Prize
Prize Bond
Bond
and
and Saving
Saving
Certificate
Certificate
Dept.
Dept.

Internal
Monitoring
Monitoring
Dept.
Dept.

General
Services
Services
Dept.
Dept.

IT
Department

4. Departments of SBP
Following are various units at SBP:
4.1 Deposit Accounts Dept
Main functions of the Deposit account unit are;
1. SBP acts as a banker to banks. Commercial banks open their
accounts with state bank. There are accounts of 41 banks and
these accounts are maintained at deposit account unit.
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2. Handles export refinance scheme.
3. The facility of remittance of government payments is provided
through this department.
4. Account reconciliation.
5. Also facilitate public remittances and fee is charged for that
whereas no fee is charged from the government.
4.2 Currency Management Dept
Currency management cycle involves a wide range of activities including:
Ensuring adequate supply of good quality notes across the country.
Forecasting annual increase in currency demand.
Timely placement of printing orders with Pakistan Security Printing
Corporation.
Examination and storage arrangements on receipt of fresh notes
from PSPC.
Maintenance of sufficient balances of currency notes/coins.
Supply of notes in the country.
Withdrawal of soiled/defective notes from circulation and their
destruction under appropriate control mechanism.
4.3 Prize Bond and Saving Certificate Dept
The Prize Bond scheme is the part of national saving scheme. The SBP
provides management services to the government for this scheme. SBP
can decide about the terms and conditions of the scheme can increase or
decrease the amount of prize money and can change the denomination.
Prize bond unit perform the following functions.
Sale and purchase of Prize bonds.
Maintenance of the prize bond stock.
Giving the prize money.
Help in organizing draws.
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Apart from prize bond this unit is involved in the management of defense
saving certificates and special saving certificates. These two instruments
are dealt with in the interest bearing account and the prize in noninterest bearing account of the unit.
4.4 Internal Monitoring Dept
Internal auditing is a profession and activity involved in helping
organizations achieve their stated objectives. Internal monitoring unit is
an independent appraisal function established within SBP to examine and
evaluate its activities as a service to the organization.
Main functions and responsibilities;
Conducting pre-audit of all accounts of the Office.
Pre audit the cases and vouchers received from various units under
SBP Expenditure regulation, budgetary limit and head of accounts.
Prize Bonds Payment cases.
Export Refinance Cases before making payment to banks
4.5 Public Accounts Dept
Under Section 21 of the State Bank of Pakistan Act 1956, the SBP has
been entrusted to
Perform banking services on behalf of the federal and provincial
governments and also to carry out their exchange, remittance and other
banking operations including the management of public debt.
The banking services provided by SBP to the federal, provincial and local
governments Includes following services.
Collection of revenue on behalf of government departments.
i.e. property tax, income tax, sales tax and all other receipts of
Govt. of Pakistan.
Making payments on behalf of government departments.
The Public Accounts Department of SBP is responsible for
maintenance of:
The Federal Govt. A/C
Provincial Govt. A/C
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Local Governments
Zakat Accounts.
Defense A/C
The data pertaining to government transactions carried in various
accounts is reported to Accountant General of the provinces, Accountant
General Pakistan Revenue (AGPR), Pakistan Railways and other
concerned departments on daily/ periodic basis.
4.6 General Services Dept
The major functions of GSU are;
Disbursement of monthly salaries and allowances.
Making other payments like pension, retirement.
Making business plans, preparation of annual budget.
Assessment of employee loans.
Procurement of office furniture, stationary, vehicles etc.
Activation and deactivation of employee medical facilities.

6.

SWOT Analysis

6.1 Strengths
Strong internal control for
transactions therefore no fraud
has ever been done
Job security, good salary
packages and benefits for

6.2 Weaknesses
Technological backwardness.
Latest procedures and best
practices are not adopted.
Staff is not well trained in IT.

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employees attract and retain
talent.
6.3 Opportunities
Investment in IT and latest
technology.

6.4 Threats
Political instability and pressure
can harm the operations of
SBP.
Excessive government
borrowings.
Circulation of fake currency.

7. Suggestions & Recommendations


It was observed that the major blockage in payment system is the
physical movement of the instrument. Cheque is the most widely
accepted Instrument to settle transactions in the world. Paper cheques
provide consumers and businesses critical alternative payments
mechanism. Today billions of cheques are written and processed each
year, and consumers and businesses remain confident and satisfied with
writing cheques.

Cheque Transaction System.


Online data usage to save time.
Token issuing and cash counters should be placed together.
Proper display on all counters.
Softwares should be updated.
Removing communication gap.

8. Conclusion
SBP greatest strength is their financial background, which happens to be
so strong that even in current market situation they are still in the
position to lend loans to other banks and have also reported profits in the
previous quarter.
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SBP has gathered large amount of the market for itself. They need to put
in systems such as a strong Employee Monitoring System which provides
transparency in all their processes and employee activity. They can and
must learn from the best case practices of other bank international as
well.

9. References
www.sbp.gov.pk
www.wikipidia.com
www.google.com.pk

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