NATIONAL COLLEGE OF BUSINESS ADMINISTRATION &

ECONOMICS
FRONT LANE CAMPUS

STATE BANK OF PAKISTAN (SBP)

NAMRA MALIK
Roll No. MSC-276
(4TH Semester)
Session: 2017-2019

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 PROJECT TITLED

STATE BANK OF PAKISTAN (SBP)

Submitted to the NCBA&E_FLC, Lahore

in partial fulfillment of the requirements
for the award of the degree of MSC

by

NAMRA MALIK
Roll No. MSC-276
Session: 2017-2019

DEPARTMENT OF BUSINESS ADMINISTRATION

NCBA&E_FLC, LAHORE

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THE ALLAH ALMIGHTY SAYS:

“O Children of ADAM we have provided you the garment to cover your body
as well as for luxury. But the best garment is the garment of righteousness.
These are some of ALLAH’s sign that they may take head”

(Sura33: verse59)

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 DEDICATIONS

To my parents and professors, especially to my Father, who always

motivated me to achieve this difficult task in better and proper way.

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 DECLARATION

I, NAMRA MALIK Roll No. MSC-276, student of MSC (Project Management), Session
2017-2019, hereby declare that the matter printed in the Project titled as “State Bank of Pakistan
(SBP)”is my own work and has been submitted as research work to the NCBA&E _FLC.

Dated Signature of Deponent

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 RESEARCH COMPLETION CERTIFICATE

It is certified that the research work contained in this Project titled “State Bank of Pakistan “has
been carried out and completed by NAMRA MALIK, Roll No. MSC-276 under my supervision.

Date: _________________ (Supervisor)

_______________________

Miss. Rabbiya Ijaz

Permanent Lecturer,

Department of Business Administration,

NCBA&E_FLC

Submitted Through:

________________________
Examination Department
NCBA&E_FLC

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 ACKNOWLEDGENT

First of all I would like to thanks my ALLAH ALMIGHTY, the creature of universe who is the
supreme authorities who guide the way and gives the courage to complete the task whose
blessing, flourished, whatever I want all respects for the last prophet HAZRAT MUHAMMAD
(Peace Be upon Him). Who enables us to recognize creator and to understand the philosophy of
life.
I really feel great when I came to know that my supervisor is Miss Ramsha Habib, who is the
highly qualified and experienced teacher, I have great honor to under her supervision. Her
invaluable help of constructive comments and suggestions for the project works have contributed
to the success of this research. I am thankful to all my teachers for their kind help.
Special thanks go to my parents. I am extremely indebted to the prayers of my Father; I would not
have been able to complete this task without blessings of Almighty Allah and prayers of my
parents.
My acknowledgement also goes to all the technicians and office staffs of NCBA&E_FLC for
their co-operations. To those who indirectly contributed in this research, your kindness means a
lot to me.
Thank you very much.

NAMRA MALIK
ROLL NO. MSC-276
SESSION 2017-2019

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8
 TABLE OF CONTENTS

INTRODUCTION ...................................................................................................................................... 10

HISTORY/BACKGROUND ...................................................................................................................... 12

WARDS & ACHIEVMENTS .................................................................................................................... 13

VISION ....................................................................................................................................................... 13

MISSION .................................................................................................................................................... 13

CORE VALUES ......................................................................................................................................... 13

OBJECTIVES ............................................................................................................................................. 14

PRODUCTS................................................................................................................................................ 14

ORGANIZATIONAL STRUCTURE......................................................................................................... 15

DEPARTMENTS OF SBP ......................................................................................................................... 15

DEPOSIT ACCOUNTS DEPT................................................................................................................... 15

CURRENCY MANAGEMENT DEPARTMENT ..................................................................................... 15

PRIZE BOND AND SAVING CERTIFICATE DEPARTMENT ............................................................. 16

MARKETING............................................................................................................................................. 17

SWOT ANALYSIS .................................................................................................................................... 18

FINANCIAL ANALYSIS …………………………………………………………………………..….20

SUGGESTIONS & RECOMMENDATIONS............................................................................................ 25

CONCLUSION ........................................................................................................................................... 26

REFERENCES ........................................................................................................................................... 27

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 INTRODUCTION

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 department, 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 SBP-Banking Services Corporation (SBP-MSC). Established under
the SBP-MSC Ordinance 2001, SBP-MSC supports SBP in performing functions such as
handling of currency and credit management, facilitating the inter-bank settlement system, and
sale/purchase of savings instruments of the Government on behalf of Central Directorate of
National Savings. SBP-MSC also collects revenue and makes payments for and on behalf of the
Government. It also carries out operational work relating to development finance, management
of public debt, foreign exchange operations and export refinance.
The Board of Directors of SBP-MSC, chaired by the Governor SBP, comprises of all
members of the Central Board of SBP and the Managing Director of SBP-MSC, National
Institute of Banking and Finance (NIBAF), is the training arm of SBP, providing executive
development trainings to new inductees and various levels of SBP employees.
The subsidiary also conducts international courses on central and commercial banking in
collaboration with the federal Government. Furthermore, NIBAF offers training to SBP-MSC
and other financial institutions. NIBAF is incorporated under Companies Ordinance, 1984 and
has a separate Board of Directors. Deposit Protection Corporation (DPC) Deposit Protection

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Corporation (DPC) has been established as a wholly owned subsidiary of SBP under the DPC
Act 2016. Upon commencement, this entity will be responsible to provide protection of deposits
of member financial institutions operating in Pakistan. The objective of DPC is to compensate
the depositors to the extent of protected deposits in the event of failure of a member Financial
Institution. The limit of protected deposits shall be determined by DPC and will be announced in
due course.

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 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-MSC was established in
2002 in order to perform operational functions of SBP (SBP website). SBP-MSC 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-MSCs handle most of the operational areas (SBP website).

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 AWARDS & ACHIEVMENTS

State Bank of Pakistan (SBP) has won the global award as the best Central Bank in
promoting Islamic finance for the year 2018. The coveted award is conferred by Islamic
Finance News (IFN), an arm of RED money Group, Malaysia. IFN Best Banks Poll is regarded
as one of the most prestigious accolades in the Islamic finance industry.
In 2016, the Atlantic Media Company (AMC) of the United States has ranked Pakistan
as a relatively stronger economy in the South Asian markets.
AMC said that during the period January–July this year, Indian 100 point index was
6.67% while Karachi Stock Exchange (KSE) had achieved 100 point index of 17 percent.

VISION
To develop SBP-MSC 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).

MISSION
To provide excellent banking and financial services to stakeholders besides ensuring
implementation of SBP policies in order to command their trust and respect.

Core Values:
 Highest Standards of Integrity.
 Institutionalizing Teamwork and Performance Culture.
 Excellence in Service.
 Advancement of Skills for Tomorrow’s Challenges.
 Awareness of Social and Community Responsibility.
 Value Creation for All Stakeholders.

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 OBJECTIVES

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

PRODUCTS

The main production of State Bank of Pakistan is to produce the new currency notes.
Regulate the monetary and credit system of Pakistan

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 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

President’s Board of
Secretariat Directors

Secretary Board
of Directors

Deposit Currency Public Accounts Prize Bond and Internal General Services
Management Saving Monitoring IT Department
Accounts Dept. Dept. Dept. Certificate Dept. Dept. Dept.

DEPARTMENTS OF SBP

Following are various units at SBP:

1. Deposit Accounts Department:
Main functions of the Deposit account unit are;
 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.
 Handles export refinance scheme.
 The facility of remittance of government payments is provided through this
department.
 Account reconciliation.
 Also facilitate public remittances and fee is charged for that whereas no fee is
charged from the government.

2. Currency Management Department:

 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.

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3. Prize Bond and Saving Certificate Department:
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 bond
 Maintenance of the prize bond stock.
 Giving the prize money.
 Help in organizing draws.

4. Internal Monitoring Department:

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

5. Public Accounts Department:

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
 Local Governments

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  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.
6. General Services Department:
 The major functions of GSU are;
 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.
 Disbursement of monthly salaries and allowances.

MARKETING

It is mainly through money and foreign exchange market that SBP implements its
monetary policy stance. To implement its monetary policy, SBP operationally focuses on
controlling short-term interbank interest rate – overnight money market repo rate – through the
use of various monetary policy tools (OMOs, Interest Rate Corridor, Reserve Requirements, FX
Swaps, etc.). The short-term rates translate in to other longer-term market interest rates, such as
KIBOR, that are used as benchmark for lending to businesses and households. In the
transmission mechanism, efficient financial markets increase the efficiency and effectiveness of
monetary policy transmission by reducing various uncertainties and improving translation of
short-term interest rates to pricing of longer-term loans.

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 SWOT ANALYSIS

1. Strengths 2. Weaknesses

 Technological backwardness.
Strong internal control for transactions
therefore no fraud has ever been done
Job security, good salary packages and

benefits for employees attract and Latest procedures and best practices

Retain talent. are not adopted.
Staff is not well trained in IT.

3. Opportunities
 Investment in IT and latest technology.
4. Threats
 Political instability and pressure can
Harm the operations of SBP.

Excessive government borrowings.

Circulation of fake currency.

PEST ANALYSES

Political Economic
 economic condition are not sound
 Worse day by day  Inflation
 Uncertain Environment  Changing government polices
 No investment by investors  Interest rates

Social Technological

 Attitude of people  Emerging Technology

 Public Opinion  Latest Software
 Desires

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 FINANCIAL ANALYSIS OF STATE BANK OF PAKISTAN

STATE BANK OF PAKISTAN AND ITS SUBSIDIARIES

CONSOLIDATED BALANCE SHEET
AS AT JUNE 30, 2017

Note 2017 2016

---------------(Rupees in '000)---------------
ASSETS
Cash and bank balances held by a subsidiary 6 2,190,657 -
Gold reserves held by the Bank 7 270,361,202 287,170,323
Local currency - coins 8 861,860 488,198
Foreign currency accounts and investments 9 1,782,539,188 1,977,084,370
Earmarked foreign currency balances 10 10,319,532 5,147,596
Special Drawing Rights of the International Monetary Fund 11 63,657,319 67,656,236
Reserve tranche with the International Monetary Fund
under quota arrangements 12 17,382 17,455
Securities purchased under agreement to resell 13 1,533,373,313 1,533,574,159
Current accounts of Governments 24.2 7,279,247 955,474
Investments - local 14 2,694,286,076 2,147,418,594
Long Term Investment in associates 15 2,134,590 -
Loans, advances and bills of exchange 16 362,703,790 350,571,180
Taxation - net 398,414 -
Assets held with the Reserve Bank of India 17 5,758,914 6,012,137
Balances due from the Governments of India and
Bangladesh (former East Pakistan) 18 9,917,256 9,214,881
Property, plant and equipment 19 111,142,903 60,074,805
Intangible assets 20 107,554 24,986
Deferred taxation 21 193,274 -
Other assets 22 8,657,388 4,348,162
Total assets 6,865,899,859 6,449,758,556

LIABILITIES
Bank notes in circulation 23 4,167,135,807 3,554,922,057
Bills payable 630,547 598,142
Current accounts of Governments 24.1 178,601,965 606,657,778
Payable to Islamic Banking Institutions against Bai Muajjal transactions 25 25,137,230 44,952,938
Payable under bilateral currency swap agreement 26 155,550,410 158,507,631
Deposits of banks and financial institutions 27 669,337,539 391,760,469
Other deposits and accounts 28 164,665,074 161,552,998
Payable to the International Monetary Fund 29 787,381,266 778,739,505
Other liabilities 30 57,515,443 49,579,000
Deferred liability - staff retirement benefits 31 89,806,875 82,419,258
Endowment fund 98,421 94,207
Total liabilities 6,295,860,577 5,829,783,983

Net assets 570,039,282 619,974,573

REPRESENTED BY
Share capital 32 100,000 100,000
Reserves 33 100,664,452 175,944,238
Unappropriated profit 44,154,941 3,712,051
Unrealized appreciation on gold reserves held by the Bank 34 266,327,601 283,342,601
Unrealized appreciation on re measurement of investments - local 14.6 93,302,881 91,386,276
Surplus on revaluation of property, plant and equipment 65,489,407 65,489,407
Total equity 570,039,282 619,974,573

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 STATE BANK OF PAKISTAN AND ITS SUBSIDIARIES
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 2017

Note 2017 2016

------- (Rupees in '000) -------

Discount, interest / mark-up and / or profit earned 36 260,870,627 252,831,070

Less: interest / mark-up expense 37 (21,368,844) (25,454,480)
239,501,783 227,376,590

Commission income 38 2,591,194 1,909,180

Exchange gain - net 39 24,569,638 25,779,375
Dividend income 12,248,843 12,226,343
Share of profit from associates 40 26,196 -
Other operating income - net 41 574,355 2,756,112
Other income - net 42 302,049 160,960
279,814,058 270,208,560

Operating expenses
Cost of preparation of bank notes and printing charges 43 9,127,971 7,730,740
Agency commission 44 9,679,298 8,968,647
General administrative and other expenses 45 22,941,749 24,250,586

(Reversal of provision against) / Provision for / write-off:

- loans and advances - net 16.4 (6,139) (756)
- claims 30.3.2 - (232)
- other doubtful assets 30.3.1.1 16,842 (86,213)
- others (14,674) (7,338)
(3,971) (94,539)
41,745,047 40,855,434

Profit before taxation 238,069,011 229,353,126

46 5,414 -

Profit after taxation 238,063,597 229,353,126

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 STATE BANK OF PAKISTAN AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED JUNE 30, 2017

Note 2017 2016

------- (Rupees in '000) -------

Profit after taxation for the year 238,063,597 229,353,126

Other comprehensive income

Items that will be reclassified subsequently to consolidated profit and loss account
when specific conditions are met:

Unrealized appreciation on remeasurement of investments - local

- Appreciation during the year 14.6 1,918,895 7,391,288
- Share of associates of other comprehensive income / (loss) - net of deferred tax (2,290) -
1,916,605 7,391,288
Unrealized (diminution) / appreciation on gold reserves held by the Group 7 (17,015,000) 39,975,291
(15,098,395) 47,366,579

Items that will not be reclassified subsequently to the consolidated profit and loss account:

Remeasurements of staff retirement defined benefit plans - net of deferred tax 45.3.4 & 45.4.6 (3,805,653) (15,327,075)
Remeasurements of property, plant and equipment - 39,511,003
(3,805,653) 24,183,928

Total comprehensive income for the year 219,159,549 300,903,633

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 RATIO ANALYSIS

a) Current Ratio Current Assets 2,278,275,675.00 181.8873

Current Liabilities 1,252,575,678.00

a) Debt Ratio Total Liabilities 6,295,860,577.00 91.69753

Total Assets 6,865,899,859.00

a) Gross profit margin Gross profits 279,814,058.00 107.2616

Sales 260,870,627.00

b) Operating profit margin Operating profits 239,501,783.00 91.80864

Sales 260,870,627.00

Earnings available for

c) Net profit margin common stockholder 238,063,597.00 91.25734

Sales 260,870,627.00

Earnings available for

e) Return on total assets (ROA) common stockholder 238,063,597.00 3.467333

Total assets 6,865,899,859.00

Earnings available for

f) Return on common equity (ROE) common stockholder 238,063,597.00 41.76267

Common stock equity 570,039,282.00

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 FINANCIAL DATA

TOTAL REVENUE (in billions)

5,250
5,228
5,200

5,150

5,100

5,050

5,000

4,950
4,937
4,900

4,850

4,800

4,750
Year 2017 Year 2018

TOTAL TAX REVENUE (in billions)

4,600

4,500
4,467
4,400

4,300

4,200

4,100

4,000
3,969
3,900

3,800

3,700
Year 2017 Year 2018

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 TOTAL NON TAX REVENUE (in billions)
1,200

1,000 967

800 761

600

400

200

-
Year 2017 Year 2017

TOTAL EXPENDITURE (in billions)

7,600
7,488

7,400

7,200

7,000

6,800
6,800

6,600

6,400
Year 2017 Year 2017

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 SUGGESTION & RECOMMENDATION

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.
 Software’s should be updated.
 Removing communication gap.

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 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.

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.

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 REFERENCES

o www.sbp.gov.pk

o www.wikipidia.com

o www.google.com.pk

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