FINAL Internship Report SBP

STATE BANK OF PAKISTAN (BSC), LAHORE
TABLE OF CONTENTS
Acknowledgement............................................................................................................................................................ 7
Executive Summary......................................................................................................................................................... 8
PART ONE........................................................................................................................................................................... 9
Introduction..................................................................................................................................................................... 10
History................................................................................................................................................................................. 11
SUBSIDIARIES OF STATE BANK OF PAKISTAN......................................................................................... 13
 National Institute of Banking and Finance (NIBAF)............................................................................13
 Deposit protection corporation (DPC)...................................................................................................... 14
 Pakistan security printing corporation (PSPC)..................................................................................... 14
 STATE OF PAKISTAN BANKING SERVICE CORPORATION...............................................................15
DEPARTMENTS OF STATE BANK OF PAKISTAN......................................................................................16
 Agricultural Credit & Microfinance Department........................................................................................... 17
Functions......................................................................................................................................................................... 17
 Banking Inspection Department (BID).......................................................................................................... 18
FUNCTIONS................................................................................................................................................................... 18
 Banking Policy and Regulations Department.................................................................................................. 20
Responsibilities............................................................................................................................................................. 20
Banking Regulation Division.................................................................................................................................... 20
 Banking Surveillance Department.................................................................................................................. 20
Main Objectives/Key Result Areas:........................................................................................................................ 20
Department Structure................................................................................................................................................... 21
 Consumer Protection Department....................................................................................................................... 23
Objectives....................................................................................................................................................................... 23
Nature of complaints handles by consumer protection department...............................................................23
 Domestic Market & Monetary Management Department......................................................................23
Departmental Goals................................................................................................................................................... 23
Departmental Objectives............................................................................................................................................ 24
 Exchange Policy department............................................................................................................................. 24
Functions......................................................................................................................................................................... 24
 Finance Department................................................................................................................................................ 25
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Functions of the Department:-.................................................................................................................................. 25

Functions Performed By Divisions......................................................................................................................... 25
Financial Accounts Division (FAD)....................................................................................................................... 26
Systems and Procedure Division (SPD)................................................................................................................ 26
Payment Controller Division (PCD)....................................................................................................................... 26
Asset Management Division (AMD)...................................................................................................................... 26
Currency Management Division (CMD)............................................................................................................... 27
Support Services Division.......................................................................................................................................... 27
 Legal Services Department................................................................................................................................. 27
Introduction.................................................................................................................................................................... 27
 Human Resource Department.......................................................................................................................... 28
FUNCTIONS OF REGULATIONS AND COMPLIANCE DIVISION.....................................................28
 Information Systems & Technology Department.......................................................................................... 28
Functions......................................................................................................................................................................... 29
Key activities................................................................................................................................................................. 29
 Infrastructure, Housing & SME Finance Department.................................................................................. 29
Departmental Goals...................................................................................................................................................... 29
 Internal Audit & Compliance Department................................................................................................... 30
Functions Internal Audit & Compliance Department........................................................................................ 30
Financial & Operational Audit Division................................................................................................................ 30
Functions......................................................................................................................................................................... 31
IT Audit Division.......................................................................................................................................................... 31
Functions......................................................................................................................................................................... 31
Compliance Division................................................................................................................................................... 32
Functions......................................................................................................................................................................... 32
Support Services Division.......................................................................................................................................... 32
Functions......................................................................................................................................................................... 33
 International Markets & Investments Department......................................................................................... 33
Introduction.................................................................................................................................................................... 33
Organization................................................................................................................................................................... 33
FX & Liquidity Management Division................................................................................................................. 33
Performance, Relationship & Product Review Division.................................................................................. 34
Fixed Income Investment Division......................................................................................................................... 34
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 Islamic Banking Department................................................................................................................................ 35

 Monetary Policy Department............................................................................................................................... 36
Mission Statement........................................................................................................................................................ 36
Functions and Responsibilities................................................................................................................................. 36
Macroeconomic Framework and Forecasting Division.................................................................................... 36
Policy Formulation Division................................................................................................................................... 36
Monetary and Credit Analysis Division................................................................................................................ 37
Office of the Corporate Secretary................................................................................................................................. 37
 Payment Systems (Operational Aspects) Department............................................................................38
Functions of Payment Systems Department......................................................................................................... 38
 Research Department.............................................................................................................................................. 38
Introduction.................................................................................................................................................................... 38
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Introduction.................................................................................................................................................................... 39
Main Functions.............................................................................................................................................................. 39
TREASURY DEPARTMENT........................................................................................................................................... 40
Functions......................................................................................................................................................................... 40
STATE BANK OF PAKISTAN (BSC) DIVISIONS........................................................................................... 41
Core Functions of State Bank of Pakistan................................................................................................................ 42
Regulation of Liquidity............................................................................................................................................... 42
Regulation and Supervision....................................................................................................................................... 42
Exchange Rate Management and Balance of Payments................................................................................... 43
Developmental Role of State Bank......................................................................................................................... 45
VISION AND MISSION STATEMENTS.............................................................................................................. 46
Vision.................................................................................................................................................................................... 46
Mission................................................................................................................................................................................. 46
CORE VALUES.................................................................................................................................................................. 47
Integrity............................................................................................................................................................................... 47
Accountability................................................................................................................................................................... 47
Team work......................................................................................................................................................................... 47
Courage................................................................................................................................................................................ 48
Excellence........................................................................................................................................................................... 48
Result oriented................................................................................................................................................................. 48
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PART TWO..................................................................................................................................................................... 49
Organo-gram State Bank of Pakistan......................................................................................................................... 50
Management hierarchy................................................................................................................................................. 56
POLICY FORMULATION AND MEETINGS AT SBP....................................................................................57
MANAGERIAL POLICIES............................................................................................................................................... 59
Credit rating....................................................................................................................................................................... 60
Employment Opportunities at SBP............................................................................................................................. 61
Regular Recruitment Schemes................................................................................................................................... 61
Recruitment on Need Basis......................................................................................................................................... 61
Recruitment for professionals.................................................................................................................................... 62
Recruitment Process for SBOTS................................................................................................................................. 63
Recruitment Process for Analyst............................................................................................................................... 63
Recruitment Process for Statistical Officers......................................................................................................... 64
New Grades and Salary Structure............................................................................................................................. 65
PART THREE................................................................................................................................................................ 66
MARKETING MIX of SBP......................................................................................................................................... 67
Products and Services:.................................................................................................................................................. 67
Distribution Channel...................................................................................................................................................... 67
Promotion:.......................................................................................................................................................................... 67
PART FOUR.................................................................................................................................................................... 69
Financial analysis of State Bank of Pakistan........................................................................................................... 70
RATIO ANALYSIS........................................................................................................................................................ 70
 Current Ratio........................................................................................................................................................... 70
Interpretation:............................................................................................................................................................. 71
 Debt- To- Total Assets:......................................................................................................................................... 72
Interpretation:............................................................................................................................................................. 72
 Debt to Equity Ratio.............................................................................................................................................. 73
Interpretation............................................................................................................................................................... 73
 Earnings per Share................................................................................................................................................ 74
Interpretation............................................................................................................................................................... 74
 Net Asset per Share............................................................................................................................................... 75
 Return on Assets.................................................................................................................................................... 76
Interpretation............................................................................................................................................................... 77
HORIZONTAL ANALYSIS........................................................................................................................................ 77
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Balance sheet Horizontal Analysis............................................................................................................................ 78

Profit and Loss Statement Horizontal Analysis................................................................................................... 80
VERTICAL ANALYSIS............................................................................................................................................... 81
Balance sheet Vertical Analysis.................................................................................................................................. 81
Profit and Loss Statement Vertical analysis.......................................................................................................... 83
PART FIVE....................................................................................................................................................................... 85
SWOT ANALYSIS......................................................................................................................................................... 86
Strengths:............................................................................................................................................................................ 86
Weakness:........................................................................................................................................................................... 87
Opportunities:................................................................................................................................................................... 87
Threats:................................................................................................................................................................................ 88
PART SIX......................................................................................................................................................................... 89
TRAINING PROGRAM............................................................................................................................................... 90
Duration of Internship................................................................................................................................................... 90
Internship plan 2018 Lahore Office......................................................................................................................... 90
Foreign exchange operation division (FEOD)...................................................................................................... 92
PROJECT#1...................................................................................................................................................................... 95
SIGNIFICANCE OF EORS................................................................................................................................................ 95
Exports............................................................................................................................................................................ 95
Export analysis (2011-2018)................................................................................................................................. 96
MODE OF PAYMENTS............................................................................................................................................. 100
Overdue procedure before EORS;...................................................................................................................... 102
Reason for introducing EORS.............................................................................................................................. 102
Export overdue reporting system (EORS):.................................................................................................... 103
Procedure of EORS................................................................................................................................................... 106
Referring the case to the FEAD:.......................................................................................................................... 106
System Functionality:............................................................................................................................................. 107
Significance of EORS................................................................................................................................................ 110
Impact of EORS on the Economy............................................................................................................................. 111
Suggestions...................................................................................................................................................................... 111
Conclusion....................................................................................................................................................................... 113
PROJECT#2.................................................................................................................................................................... 114
IMPACT OF SUBSIDIES ON THE EXPORTS.......................................................................................................... 114
What is subsidy?....................................................................................................................................................... 114
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Export Subsidy.......................................................................................................................................................... 114

Impact of subsidy on Economy........................................................................................................................... 115
Working of FEOD division (Under Subsidy Sub-Division).......................................................................115
Subsidy schemes in Pakistan:.............................................................................................................................. 116
Detail of Subsidy Schemes (2009 – 2018)........................................................................................................... 116
Textile Subsidy Schemes:.......................................................................................................................................... 117
Non-Textile Subsidy Schemes.................................................................................................................................. 118
Wheat Subsidy Schemes............................................................................................................................................ 118
Sugar Subsidy Schemes.............................................................................................................................................. 118
Impact of Subsidy on the Export of Textiles....................................................................................................... 121
Analysis of exports in textile sector....................................................................................................................... 121
.............................................................................................................................................................................................. 123
Reasons for the fluctuation in Export of Textile.............................................................................................. 123
Procedure for Lodgment of Claims under DLTL (Textile sector)...........................................................125
Issues of textile sector.................................................................................................................................................. 128
Impact of Subsidy on the Export of Sugar........................................................................................................... 130
Analysis of sugar exports........................................................................................................................................... 131
Procedure for Lodgment of Claims under DLTL (Sugar sector).....................................................................133
Key issues of Sugar sector........................................................................................................................................... 136
Impact of subsidies on export of Wheat.............................................................................................................. 137
Export Analysis of wheat........................................................................................................................................... 137
Procedure of the lodgment of claim (wheat)...................................................................................................... 140
Key issues of Wheat Sector....................................................................................................................................... 142
Suggestions to encourage exports.......................................................................................................................... 143
Conclusion....................................................................................................................................................................... 143
PART SEVEN................................................................................................................................................................ 145
CONCLUSION.............................................................................................................................................................. 146
RECOMMENDATIONS............................................................................................................................................ 147
Annexure:......................................................................................................................................................................... 149
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ACKNOWLEDGEMENT
Every word of praise and gratitude goes to Allah Almighty whose blessings and bounties are
innumerable to realize and count, and due respect to Holy Prophet (peace be upon Him) who
enables us to recognize our creator and whose teachings are a role model for us to follow in the
time of darkness and despair.
I am highly thankful to the staff members of State Bank of Pakistan; they really cooperated with
me and provide me their complete guidance. In Lahore Office, I observe friendly environment
between the employees and they also give me the friendly environment to learn about the offsite
supervision and enforcement of the SBP. As The SBP’s rules and regulations are very much
strict and sensitive to their secrecy, even they have not taken any understanding from me and
they let me know their delicate operations.
It has been great honor and privilege to undergo training at SBP BSC Lahore. Special Thanks to
Maam Saima Laiq (ACM, FEOD) and our supervisor Maam Arifa , Maam Ume-Laila and
Sir Usman for their guidance. I feel great pride and pleasure for the completion of this report.
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EXECUTIVE SUMMARY
This report is about my internship program at State Bank of Pakistan, Lahore. In this
comprehensive report, I have discussed about every major aspect of the SBP, which I observed
and perceived during my internship program. In this report you will find the detail about the SBP
right from its incorporation to the current position. Along with it, the processes, policies and
procedures of the SBP are also discussed in detail. During my internship program, I mainly
worked with one department: Offsite Supervision and Enforcement Department. This department
has been discussed in detail and all the policies and procedures have been described thoroughly.
As the main purpose of internship is to learn by working in practical environment and to apply
the knowledge acquired during the studies in a real world scenario in order to tackle the
problems using the knowledge and skill learned during the academic process. In this report the
detailed analysis of State Bank of Pakistan has been done and all the financial, managerial and
strategic aspects have been evaluated to analyze the current position of the SBP.
In the end the training section consists of the project which I have completed there under the
supervision of Sir Ali Turab Assistant Director of Offsite Supervision and Enforcement
Department (OSED).
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PART ONE
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INTRODUCTION
The central banking authority in Islamic Republic of Pakistan has been vested with the State
Bank of Pakistan.
State Bank of Pakistan is the Central Bank of the country. While its constitution, as originally lay
down in the State Bank of Pakistan Order 1948, remained basically unchanged until 1st January
1974 when the Bank was nationalized, the scope of its functions was considerably enlarged. The
State Bank of Pakistan Act 1956, with subsequent amendments, forms the basis of its operations
today.
Under the State Bank of Pakistan Order 1948, the Bank was charge with the duty 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".
The scope of the Bank’s operations was considerably widened in the State Bank of Pakistan Act
1956, which required the Bank to "regulate the monetary and credit system of Pakistan and to
foster its growth in the best national interest with a view to securing monetary stability and fuller
utilization of the country’s productive resources".
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Like a Central Bank in any developing country, State Bank of Pakistan performs both the
traditional and developmental functions to achieve macro-economic goals.
HISTORY
Before independence on 14 August 1947, the Reserve Bank of India (central bank of India) was
the central bank for what is now Pakistan. On 30 December 1948 the British Government's
commission distributed the Bank of India's reserves between Pakistan and India - 30 percent
(750 M gold) for Pakistan and 70 percent for India.
The losses incurred in the transition to independence were taken from Pakistan's share (a total of
230 million). In May, 1948 Muhammad Ali Jinnah (Founder of Pakistan) took steps to establish
the State Bank of Pakistan immediately. These were implemented in June 1948, and the State
Bank of Pakistan commenced operation on July 1, 1948.
Under the State Bank of Pakistan Order 1948, the state bank of Pakistan was charged with the
duty 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".
A large section of the state bank's duties were widened when the State Bank of Pakistan Act
1956 was introduced. It required the state bank to "regulate the monetary and credit system of
Pakistan and to foster its growth in the best national interest with a view to securing monetary
stability and fuller utilization of the country’s productive resources". In February 1994, the State
Bank was given full autonomy, during the financial sector reforms.
On January 21, 1997, this autonomy was further strengthened when the government issued three
Amendment Ordinances (which were approved by the Parliament in May 1997). Those included
were the State Bank of Pakistan Act, 1956, Banking Companies Ordinance, 1962 and Banks
Nationalization Act, 1974. 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. The amendments to the Banks
Nationalization Act brought the end of the Pakistan Banking Council and allowed the jobs of the
council to be appointed to the Chief Executives, Boards of the Nationalized Commercial Banks
(NCBs) and Development Finance Institutions (DFIs). The State Bank has a role in their
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appointment and removal. The amendments also increased the autonomy and accountability of
the chief executives, the Boards of Directors of banks and DFIs.
The State Bank of Pakistan also performs both the traditional and developmental functions to
achieve macroeconomic goals. The traditional functions may be classified into two groups:
 The primary functions including issue of notes, regulation and supervision of the
financial system, bankers’ bank, lender of the last resort, banker to Government, and
conduct of monetary policy.
 The secondary functions including the agency functions like management of public debt,
management of foreign exchange, etc., and other functions like advising the government
on policy matters and maintaining close relationships with international financial
institutions.
The non-traditional or promotional functions, performed by the State Bank include development
of financial framework, institutionalization of savings and investment, provision of training
facilities to bankers, and provision of credit to priority sectors. The State Bank also has been
playing an active part in the process of Islamization of the banking system.
Based on the specialization of functions all departments of SBP were divided into the following
two clusters.
1. Banking Cluster
2. Operation Cluster
Each cluster contains groups and different groups include different departments.
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SUBSIDIARIES OF STATE BANK OF PAKISTAN

There are “four” fully owned subsidiaries to augment its functions. These are:
 National Institute of Banking and Finance (NIBAF)

 Deposit protection corporation (DPC)
 Pakistan Security Printing Corporation (PSPC)
 Banking Services Corporation (BSC)
 NATIONAL INSTITUTE OF BANKING AND FINANCE (NIBAF)
NIBAF is the subsidiary and training arm of SBP, providing executive development trainings to
new inductees and various levels of SBP employees. It also conducts international courses on
central and commercial banking in collaboration with the federal Government. Furthermore,
NIBAF offers training to SBP-BSC, commercial banks, micro and rural finance providers and
other financial institutions. NIBAF is incorporated under Companies Ordinance, 1984 and has a
separate Board of Directors.
NIBAF is located in Islamabad with an office in Karachi.
It offers in-house training programs consist of Pre-induction Programs and skill up gradation
courses for officers and executives working in SBP and BSC.
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 Pre-Induction Program
This program is to equip the new inductees to perform their duties efficiently and effectively. All
the recruitments are required to attend NIBAP pre-induction training at Islamabad.
 State bank officers training scheme
Basic skills consisting of different modules are given to the inductees. Major modules include
communication skills, office management, Pak economy, Islamic banking and finance,
development finance group, auditing, office management etc.
The total duration of this program is 20.1 weeks as per latest offering. During and at the end of
the module there are different assignments and tests and a comprehensive exam is also
conducted at the end. The final results are computed on the results of modules’ tests and final
comprehensive exam.
 DEPOSIT PROTECTION CORPORATION (DPC)

DPC is the fully owned subsidiary of SBP. It has been established under the DPC Act 2016. This
entity will be responsible to protect the banks’ depositors and to compensate the depositor’s loss
if any financial institution fails to pay. DPC will determine the limit of protected deposits.
A separate Sharia compliant mechanism of deposit protection shall be put in place for protecting
the depositors of Islamic Banks.
The board of the corporation will consist of seven directors, which will include a deputy
governor of the SBP as chairman, four directors to be appointed on nomination by the federal
government in consultation with the SBP and an official of the Ministry of Finance.
 PAKISTAN SECURITY PRINTING CORPORATION (PSPC)

PSPC was established in 1969 and it has three printing press located in Lahore, Karachi, and
Islamabad. Its headquarters are at Islamabad.
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SBP has acquired the prize bond and bank note printing function of PSPC from the federal
Government. SBP has been in the negotiation with the Federal Government for two years to
acquire the functions of PSPC. This was in line with the global and international trend as a
number of Central Banks have their own banknotes printing facilities.
The managing director of the company is deputed by the SBP. It is now fully owned subsidiary
of SBP and it has independent Board of Directors.
 STATE OF PAKISTAN BANKING SERVICE CORPORATION
It was established as a wholly owned subsidiary in January, 2002 under the SBP-BSC Ordinance
2001. It acts as an operational arm of SBP and is engaged in managing currency, foreign
exchange operations and foreign exchange adjudication, providing banking services to the
federal and provincial governments and financial institutions regulated by SBP, conducting
development finance activities in support to the development finance group of the SBP,
implementing export refinance schemes, and performing agency functions like sales or purchase
of national prize bonds including managing prize money draws, sale and purchase of national
saving schemes or any other functions assigned by SBP.
The board of directors are chaired by the Governor SBP, comprises of all members of the
Central Board of SBP and the Managing Director of SBP-BSC.
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DEPARTMENTS OF STATE BANK OF PAKISTAN
SBP has many different departments which performs the different functions. The departments of
SBP are as under:
1. Agricultural Credit & Microfinance Department

2. Banking Inspection (On-Site) Department
3. Banking Policy & Regulations Department
4. Banking Surveillance Department
5. Consumer Protection Department
6. DFIs & Exchange Companies Inspection (On-Site) Department
7. Domestic Market & Monetary Management Department
8. Exchange Policy Department
9. Economic Policy Review Department
10. External Relations Department
11. Finance Department
12. Legal Services Department
13. Human Resource Department
14. Information Systems & Technology Department
15. Infrastructure, Housing & SME Finance Department
16. Internal Audit & Compliance Department
17. International Markets & Investments Department
18. Islamic Banking Department
19. Monetary Policy Department
20. Museum & Art Gallery Department
21. Office of the Corporate Secretary
22. Off-site Supervision & Enforcement Department
23. Payment Systems (Operational Aspects) Department
24. Research Department
25. Statistics and Data Warehouse Department
26. Treasury Operations (Back Office) Department
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 AGRICULTURAL CREDIT & MICROFINANCE DEPARTMENT
FUNCTIONS
The Department is mainly responsible to meet credit needs of agriculture, being mainstay of
Pakistan’s economy, generating nearly one fourth of the total output and 42% of total
employment and is a major source of foreign exchange earnings. Other functions of the
department are as under:-
1. Operate as a focal point in SBP for all agri. finance related policies, programs and
projects in consultation with Federal & Provincial Governments/ departments, banks,
SBP-BSC Offices and farming community.
2. Maintain an expert staff to study all questions of agricultural credit and be available for
consultation by the federal government, provincial governments, provincial cooperative
banks and other banking organizations.
3. Assess credit requirements of the farm and non-farm sectors in rural areas in
collaboration with provincial planning departments.
4. Review the issues & challenges faced and developments taking place in agriculture
finance and formulate policies for banks accordingly.
5. Allocate annual indicative credit targets and monthly monitor the agri. loans
disbursements against these targets.
6. Compile & disseminate periodical data on agriculture finance for use & analysis by the
bank, government and general public.
7. Conduct ACAC and PSCAC meetings bi-annually.
8. Initiate and undertake information dissemination and awareness building programs for
farmers and special training programs for commercial banks.
9. Liaise with MINFAL, Insurance companies, Provincial Agriculture Departments,
revenue authorities, banks, etc. to redress issues in flow of credit to agriculture sector.
10. Monitor SBP credit lines to PPCBL & ZTBL.
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 BANKING INSPECTION DEPARTMENT (BID)
Banking Inspection Department (BID) is one of the core departments at SBP.
FUNCTIONS
BID plays a pivotal role in meeting SBP’s main responsibility of supervising the financial
institutions to maintain soundness of the system and protection of the interest of depositors,
thereby ensuring public confidence in the system. In order to assess a financial institution, BID
conducts regular on-site inspection of all scheduled banks inclusive of the foreign banks & DFIs.
The present supervisory structure at the department is institution focused whereby concerned
Desk In-charges (Senior Joint Directors, Joint Directors & Junior Joint Directors) have been
assigned specific institutions for effective monitoring through on-site examination, off-site
reports from Banking Supervision Department and various market reports.
The regular on-site inspection is conducted on the basis of CAMELS Framework. (Capital, Asset
Quality, Management, Earnings, Liquidity, Sensitivity and System & Controls). CAMELS is an
effective rating system for evaluating the soundness of financial institutions on a uniform basis
and for identifying these institutions requiring special attention or concern. Here the focus of
inspection is generally on risk assessment policies & procedures of the banks and control
environment to keep attached risks within acceptable limits and compliance with laws,
regulations and supervisory directives. In continuation of the inspection process, discussions are
held with external auditors to review banks’ internal controls, compliance with legislation &
prudential standards and adequacy of provisions. Here it would be important to mention that BID
works in close coordination with Off-Site Surveillance Desk at Banking Supervision Department
and other departments in SBP.
BID conducts the regular full scope examination of banks pursuant to an inspection schedule;
however, flexibility exists in policy for frequency of inspections depending upon the need to
maintain safety & soundness. CAMELS rating is a criteria to determine the frequency of
inspection of banks as weak institutions are given greater attention. Special investigations
(targeted inspections) are also conducted as and when circumstances so warrant on the basis of
complaints or market reports about specific institution.
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Examiners document their assessment of the overall risks posed by each bank in the inspection
work papers and summarize their inspection findings in the form of inspection reports. In
formulating this assessment, examiners consider all available sources of information including,
but not limited to: findings, scope and recency of previous inspections, ongoing monitoring
efforts of offsite surveillance desks, information received through pre-inspection letters or other
communications, regulatory reports and published financial information, reports of internal and
external auditors.
Beside the regular inspection report, BID also prepares statutory reports under Section 25-AA of
the Banking Companies Ordinance 1962 for banks regarding written-off loans, mark-up and
other dues, or financial relief through rescheduling & restructuring of loans, on yearly basis and
is submitted to Federal Government. Additionally, BID also submits a Quarterly Report to
Federal Government under section 40A of Banking Companies Ordinance 1962 giving
shortcomings and violations on the part of banking company’s management. BID also conducts
inspection of exchange houses under regulation No 32 formulated under Clause (ii) of subsection
3AA of Foreign Exchange Regulation Act 1947.
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 BANKING POLICY AND REGULATIONS DEPARTMENT
RESPONSIBILITIES
Being the regulatory arm of SBP, the department has developed a new set of Prudential
Regulations (PRs) for various sectors such as Corporate, SMEs, and Consumer Financing in
consultation with Pakistan Banks Association (PBA) and other stakeholders. To facilitate the
banking industry a more liberal branch licensing policy is adopted. In order to enforce the
stringent standards for the corporate governance envisaged by SBP the department implements
the “Fit and Proper Test” criteria for appointment of key executives in the banks. The department
has been managing various schemes started by SBP along with Corporate Industrial
Restructuring Corporation (CIRC) and Committee for Revival of Sick Industrial Units (CRSIU)
for handling the problems of non-performing loans (NPLs) in the banking sector.
To fulfill the above responsibilities the department has been divided into different divisions on
the basis of relevant work streams. Each Division is sub-divided into different units. A brief
description of each division is given hereunder;
BANKING REGULATION DIVISION
The division is responsible for continuous reviewing and proposing changes/amendments in the
banking laws and Prudential Regulations for the development of an effective legal and
regulatory framework; to promote prudent, sound banking practices to ensure healthy financial
sector in Pakistan. The division is also responsible for capacity building of the personnel of the
department through arrangement of training courses, seminars, and conferences both at foreign
and local levels. In addition to this, it is also facilitating in the implementation of Performance
Management System (PMS) in the Department
 BANKING SURVEILLANCE DEPARTMENT
MAIN OBJECTIVES/KEY RESULT AREAS:
 To ensure effective regulatory and supervisory oversight of Banks and DFIs.
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 To assess and review, periodically, performance and future outlook of banking system.
 To monitor risk profiles of banks, to prescribe guidelines etc requiring banks and DFIs to
put in place adequate Risk Management Systems
 Developing detailed understanding of New Basle Capital Accord.
 To ensure compliance with Basel Core Principles of Banking Supervision.
 To provide online collection & dissemination of credit related information to financial
institutions in order to facilitate their credit appraisal process.
DEPARTMENT STRUCTURE
The Department has been continuously improving its operations so that it remains effective in
the face of changing practices of the banking and financial system. To undertake above stated
variety of functions, the Department has been structured into different divisions. A brief
description of each is given hereunder: -
 Risk Management & Analysis Division (RMD)
This Division is responsible for monitoring different risks faced/assumed by individual
Banks/DFIs and prescribes policies/issues guidelines etc for managing/mitigating these risks.
Inter alia it also monitors the capital adequacy of banks to ensure that the banks remain
adequately capitalized. It also monitors operational risks and reviews of operational policies
of commercial banks and lays down disclosure requirements and monitors compliance
thereof.
 Basel Accord & Core Principles Division (BA&CPD)
The primary objective of this division is to implement the Basel II Accord in the banking
sector. This involves participating in capacity building of the banking industry to understand,
adapt and implement the Basel Accord and then to also monitor compliance in this regard.
The other objective is to ensure compliance with Basel Core principles of banking
Supervision..
 Banking Sector Assessment Studies Division (BSASD)
This division is primarily responsible for reviewing and assessing, on periodical basis, the
banking system performance and its future outlook. The division also conducts various stress
testing exercises to assess the resilience of the banking sector to various shocks.
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 Credit Information Bureau (CIB)

The Credit Information Bureau collects and disseminates credit data from and to financial
institutions to facilitate their credit appraisal process. It maintains database of all borrowers
who avail credit facilities from financial institutions and provides online access to financial
institutions to submit monthly credit data and to generate CIB reports.
 Coordination & Administration Unit (CAU)
The primary objective of this division is to provide necessary support services to the
Department’s staff and officers to facilitate them in effective and efficient discharge of
assigned functions/ responsibilities. It coordinates with other departments and external
organizations for timely provision of support services and technological assistance. It is also
responsible for receipt/dispatch of correspondence and records of inward and outward mail,
besides preparing a consolidated business plan for the department and its monitoring and
follow up for effective implementation. The Division also coordinates on various training
activities for imparting training to the staff/officers.
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 CONSUMER PROTECTION DEPARTMENT
OBJECTIVES
1. To promote culture of social responsibility in banks/DFIs/MFBs for amicable resolution

of consumers’ disputes.
2. To effectively deal with public grievances against Banks/ DFIs/MFBs
3. To assist banks and financial institutions in credit risk management through providing
online access to Electronic Credit Information Bureau (eCIB) database.
4. To review and formulate consumer protection policies and guidelines.
5. To create consumer awareness and transparency regarding financial products and
services being offered by the banks/DFIs/ MFBs.
6. To deal with Utility Bills, Pension disbursement, unclaimed deposits and the affairs of
Banking Mohtasib Pakistan (BMP).
NATURE OF COMPLAINTS HANDLES BY CONSUMER PROTECTION DEPARTMENT
1. ATM/Debit cards issue

2. Auto finance
3. Credit card irregularities
4. Frauds and forgeries
5. Operations of PLS accounts
6. Personal loans
7. Service charges
 DOMESTIC MARKET & MONETARY MANAGEMENT

DEPARTMENT
DEPARTMENTAL GOALS
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The core objective of Domestic Markets and Monetary Management Department is to implement
the Monetary Policy objectives of the State Bank of Pakistan by using the available tools in both
the money and foreign exchange markets.
DEPARTMENTAL OBJECTIVES
 Monitoring of Money and FX market activities

 Monetary Operations.
 Conducting auctions for raising short term and long-term domestic debt for the
government.
 Providing funds to the financial institutions as lender of last resort.
 FX operations in the domestic FX market in accordance with monetary policy objectives.
 FX Cash Flow Management.
 FX Reserve Analysis & Reporting.
 Managing External Debt Repayments
 EXCHANGE POLICY DEPARTMENT
FUNCTIONS
Exchange Policy Department (EPD), one of the core departments of the State Bank is
responsible for overall stability of the foreign exchange market and is engaged in the process of
policy formulation and implementation. It reviews on continuous basis, the existing rules and
regulations, to facilitate foreign exchange activities in the country. Foreign exchange business in
Pakistan is governed / regulated under Foreign Exchange Regulations Act, 1947 (FERA, 1947).
Foreign Exchange Manual outlines the rules and regulations governing foreign exchange
business in the country for the guidance of Authorized Dealers (ADs), Exchange Companies
(ECs) and general public including local/foreign investors as well as other stakeholders. The
changes in instructions/policies/procedures are brought through F.E. Circulars/Circular letters.
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EPD lays down policy measures in consultations with relevant Government departments,
Ministries, various trade bodies, chambers and other stakeholders.
Exchange Policy Department is structured into three divisions namely:
1. Policy
2. Investment
3. Exchange Companies
A brief overview of each division’s objectives / functions is as under:
 FINANCE DEPARTMENT
FUNCTIONS OF THE DEPARTMENT:-
1. Maintenance of books of accounts and preparation of financial statements of the Bank in

accordance with the IAS, as adopted by the Bank..
2. Coordination and facilitation for Business planning and budgeting function in the Bank
and periodic reporting to the management and to the Board.
3. Management of Federal, Provincial, and District Governments Accounts. Policy &
operations related coordination with MOF, CBR, AGPR, and other Govt. agencies.
4. Maintenance of foreign currency accounts/ investments and execution of International
payments and receipts.
5. Maintenance of accounts relating to International Organizations and Donor Agencies like
IMF, IBRD, ADB, Asian Clearing Union (ACU) etc.
6. Currency issuance and its overall management.
FUNCTIONS PERFORMED BY DIVISIONS
The Finance Department is responsible to perform and manage the functions detailed on pre-
page. It controls the working of the Offices under the provisions of Issue and Banking
Department Manuals. Issue Department deals with management of currency operations, which
includes designing, printing of currency notes and its circulation. Banking Department relates to
the operation of offices of the Bank, maintenance of Federal and Provincial Government
Accounts, booking of financial transactions in the books of accounts of Central Directorate and
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issue of weekly Statement of Affairs as required under the provisions of SBP Act, 1956,
preparation of Profit and Loss Account and Balance Sheet on yearly basis, formulation of budget
estimates of revenue and capital expenditure. Management of General Provident Fund and
Provident Fund balances of all employees of the Bank. Operational control of working of offices
by framing policies and procedures under the provisions of Banking/Issue Department Manuals,
Sale/ purchase of foreign currencies, maintenance of foreign reserves of the country. To achieve
the above objectives, the Department has been divided into seven divisions as detailed below:
FINANCIAL ACCOUNTS DIVISION (FAD)
SYSTEMS AND PROCEDURE DIVISION (SPD)
Systems & Procedures Division (SPD) acts as a liaison between functional users & ISTD to
ensure effective systems development, implementation, and usage. Major responsibilities are:
1. Representation of Finance Department, SBP, in various automation projects under

2. Development / implementation (RTGS & Data Ware House).
3. Recommend continuous business process refinement in coordination with business units
of Finance Department SBP and SBP BSC.
4. Participate in automated solutions development / configuration for SBP in financial areas
PAYMENT CONTROLLER DIVISION (PCD)
This Division is responsible for:
1. Making of payments to external suppliers and employees of the Bank after

independent verification of transaction documents on the basis of bills/
invoices/claims approved by the processing units.
2. Checking and verifying the selected financial transactions/cases referred by the
Director Finance to ensure accuracy and compliance to respective rules and
regulations.
ASSET MANAGEMENT DIVISION (AMD)
Assets Management division is responsible for:
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1. Assets capitalization, assets transfers and overall responsibility to manage and maintain
2. Assets physical inventory, keeping track of physical location of assets.
3. Maintaining the financial information of the assets, cost evaluation and
retirements/disposal.
4. To ensure the smooth and unhampered running of the Fixed Assets Management
function.
5. To record all the expenses regarding repair/ maintenance and rent taxes for SBP
buildings and equipments.
CURRENCY MANAGEMENT DIVISION (CMD)
Currency Management Division is responsible for:
1. Policy making and management of Currency related matters, which include designing,
2. printing and issuance of Bank notes.
3. Issuance of Statements of Affairs of Issue Department on Weekly, Monthly and
Quarterly Basis.
4. Preparation of Balance Sheet of Issue Department at every financial year-end.
SUPPORT SERVICES DIVISION
Support Services Division performs the function as follow:
1. To deal with various administrative matters arising in the Finance Department

2. To provide a healthy and sound environment to officers of Finance Department
 LEGAL SERVICES DEPARTMENT
INTRODUCTION
The LSD is responsible to provide legal support to the Departments of State Bank of Pakistan
and its subsidiaries. Its domain covers litigation, advisory and regulatory /legislative functions to
be addressed both on a case to case basis as well as through on-going identification of
opportunities to provide clarity of direction and reduce litigation through preventive measures.
At present the LSD is divided into the following divisions:-
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1. Corporate Services Division

2. Banking Legal Division
3. Litigation Division
4. Projects, Compliance and Support Services Division
The role of this office is provision of quality service in accordance with its functions, through
close interaction with stake holders for easy accessibility to sound and critical advice outlining
the shortest lawful path to goals of the client departments.
 HUMAN RESOURCE DEPARTMENT
FUNCTIONS OF REGULATIONS AND COMPLIANCE DIVISION
1. Disciplinary & Litigation Unit: Handles employee discipline, initiates disciplinary

actions to enforce organizational standards and discourage infractions. Union affairs,
resolution of conflict, arbitration and litigation processes.
2. Transfer & Posting Unit: Reviews cases of Interdepartmental transfers as per policies
and approvals. Postings of officers in SBP (BSC) other national / international
institutions on deputation.
3. Employee Separation Unit: This Unit process cases related to resignations by
employees from the Bank’s service and conduct exit interviews of outgoing employees.
The case is later on submitted to higher up for approval.
4. Internal Monitoring Unit: Carry out audit of cases received from various Divisions of
HRD and ensure compliance of SBP policies and practices. Liaison with internal and
external auditors for smooth execution / completion of audit of HRD also falls under the
scope of this unit.
5. Business Planning & Budgeting Unit: This unit formulates Department’s Annual
Business Plan and Budget. Generates quarterly analysis of Business Plan and monthly
budget variance report. Keeps track of all the key initiatives and developments being
made in various Divisions of HRD.
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6. Admn & Co-Ordination Unit: Management of Imprest Account and distribution of

letters etc in and outside the department/Bank. Also monitors other day to day
administrative activities of the Department.
7. Reward Management & HRIS Division
 INFORMATION SYSTEMS & TECHNOLOGY DEPARTMENT
FUNCTIONS
1. Application Portfolio
2. Hosting & Database
3. Coordination & Support Services
4. Communications Infrastructure
5. Desktop Setup and Support & 1st Line Helpdesk
6. Policies, controls and assurance
KEY ACTIVITIES
1. Run and maintain information systems and technology infrastructure

2. Highest level of availability of IT services (servers, network, databases, business
applications, email, and Web)
3. Confidentiality and integrity to ensure information assurance
4. Setup of Disaster Recovery
5. Fulfill business automation demand
6. Performance tuning and IT resource optimization
7. Countrywide IT support for 4000+ networked desktops, related infrastructure and
applications
8. Provide End-users’ IT trainings
9. Manage IT consumer demand including PCs, laptops printers etc
 INFRASTRUCTURE, HOUSING & SME FINANCE DEPARTMENT
DEPARTMENTAL GOALS
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1. To work for improvements in Regulatory framework in the areas of infrastructure,

housing and SME Finance through appropriate measures and special initiatives.
2. To Plan and execute Capacity Building measures for Banks.
3. To formulate & implement credit schemes on concessional basis to promote the exports.
4. To take measures for developing secondary mortgage Lending & securitization for
ensuring long-term funding/liquidity to the housing and infrastructure sectors.
5. To initiate research activities on related areas.
6. To initiate measures for implementation of the HAG recommendations.
7. To consolidate & publish DFG Quarterly Review.
8. To monitor the flow of banks' credit to PSEs and for commodity operations.
9. To monitor growth trends of sectors through collection of data/analysis, and
dissemination of the same to stakeholders.
10. Promotion and Development of infrastructure, housing and SME finance.

11. Capacity Building of Financial Institutions
12. Promotion of Exports of the country
13. Effective Coordination/Communication with key stakeholders.
14. Effective monitoring of Banks Credit to PSEs/ABs and for commodity operations.
 INTERNAL AUDIT & COMPLIANCE DEPARTMENT
FUNCTIONS INTERNAL AUDIT & COMPLIANCE DEPARTMENT
Internal Audit & Compliance Department is performing three types of functions i.e. Financial &
Operational Audit, IT Audit and Compliance. There are four divisions in the department:
 Financial & Operational Audit Division

 IT Audit Division
 Compliance Division
 Support Services Division
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FINANCIAL & OPERATIONAL AUDIT DIVISION
This division is responsible to conduct risk based audit of 30 departments of the Bank, covering
financial, operational and the aspects relating to Corporate Governance.
FUNCTIONS
 Examine and evaluate adequacy and effectiveness of the internal control systems in the
Bank.
 Review the applications and effectiveness of risk management procedures and risk
assessment methodologies in financial, operational and Corporate Governance aspects of
the Bank’s activities.
 Review financial, automation technology and MIS.
 Review and ensure accuracy and reliability of accounting records and financial reports.
 Perform testing of both transactions and functioning of specific internal control
procedures.
 Evaluate and ensure that approved policies and procedures meet legal and regulatory
requirements.
 Examine and evaluate effectiveness of existing policies, procedures and give
recommendations for improvements.
 Identify opportunities for cost savings in Bank operations and make recommendations.
 Examining that resources are acquired economically, used efficiently and safeguarded
adequately.
 Review various reports of Bank’s subsidiaries, recommend improvements and provide
policy guidelines.
IT AUDIT DIVISION
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This division is responsible to conduct examination of automation of various working areas of

the Bank.
FUNCTIONS
 Ensure Security System Compliance on the policies & implementation of security put in
place by I&STD.
 Evaluate / test IT controls and procedures of all IT systems and applications used in SBP.
 Conduct audit of RTGS, Swift, Unix System, E-mail & Internet System, E-CIB, Data
Warehouse, Network System, IS&TD, Globus, Oracle ERP etc.
 Coordinate and provide support to Financial and Operational Audit Division to carry out
IT Audit of all departments.
 Co-ordinate closely with SBP BSC I.T. Auditors and provide useful recommendations.
COMPLIANCE DIVISION
In order to keep the working of Audit Department aligned with the best international practices, a
new division, captioned as 'Compliance Division', has been created in the Department during the
recent Reorganization and Restructuring of SBP. With a view to have more emphasis and focus
on the compliance, Audit Department has since been renamed as Internal Audit & Compliance
Department. This division is responsible for monitoring compliance of various administrative /
operative instructions, rules, and regulations by constantly reviewing and reporting status of
compliance and non-compliance.
FUNCTIONS
 Study and emphasize compliance of best international practices in audit of various

functions of SBP.
 Monitor compliance of Administrative/Operational Instructions, Rules, Regulations
issued from time to time by the Management.
 Obtain a time bound action plan from the Auditee Departments with regard to
compliance of Audit recommendation, agreed upon.
 Review over the compliance carried out by the auditee departments.
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 Prepare and put up a consolidated Report to the Governor regarding the status of
compliance and non-compliance of the recommendations agreed by the Departmental
Management.
 Monitor the functional reporting of IAD of SBP BSC, comprising of 18 Internal Audit
Units located at 16 field offices, HO and NIBAF.
SUPPORT SERVICES DIVISION
Services Unit is responsible for providing support to departmental employees relating to

administration, personnel and logistics.
FUNCTIONS
 Prepare of Annual Business Plan and Budget.

 Maintenance of Imperest Account.
 Schedule and arrange Departmental meetings
 Maintain record of Audit Reports sent to Auditee departments.
 Maintenance / house-keeping of premises and equipment
 Manage record of communications received in/sent from the Department.
 Manage all matters regarding leave/PMS/reward recognition etc of the staff of the
Department
 Send monthly/quarterly returns to the concerned quarters.
 Manage logistics including stationary, computers and other consumables and keep stock
of Fixed Assets of the Department.
 INTERNATIONAL MARKETS & INVESTMENTS DEPARTMENT
INTRODUCTION
International Markets and Investments Department (IMID) was established in September 2006
as a new Department under the Financial Markets and Reserve Management (FMRM) Cluster
33
subsequent to the reorganization of State Bank of Pakistan. The creation of IMID consolidated
the reserve management activities of SBP in a single Department.
ORGANIZATION
The organization of the Department is spread over the following three divisions to achieve its
goals.
1. FX & Liquidity Management Division

2. Performance, Relationship & Product Review Division
3. Fixed Income Investment Divisio
FX & LIQUIDITY MANAGEMENT DIVISION

The FX & Liquidity Management Division is comprised of three units namely International FX
& Swap Unit, Money Market Investment Unit and Data management & reporting Unit. The
Division is responsible for managing price risk, diversification for currencies portfolio,
rebalancing and funding of NOSTRO, managing cash for government debt payments managing
cross country cash flows and open exposure, managing liquidity risk, managing cash flow for all
currencies and managing database and maintaining maturity profile.
PERFORMANCE, RELATIONSHIP & PRODUCT REVIEW DIVISION
Performance, Relationship & Product Review Division is comprised of two units namely
Performance Measurement & Relationship Unit and Product Review & Research Unit. The
Division is responsible for managing overall portfolio performance, analyze sources of return
and risk through Performance Attribution and Value at Risk/Tracking Error reports for
individual as well as consolidated portfolios against respective benchmark(s) through Analytics
Platform, preparea monthly global economic review & weekly research reports on financial
markets, review new investment products and asset classes to evaluate their suitability for SBP’s
investment objective, Review, evaluate and recommend changes in investment policy, strategic
asset allocation, investment mandates and benchmark.
FIXED INCOME INVESTMENT DIVISION
34
Fixed Income Investment Division is comprised of three units namely Fixed Income Strategy
Unit, Fixed Income Dealing Unit and Data Management and reporting Unit. The Division is
responsible to devise an investment strategy for fixed income portfolio, construct and optimize a
fixed income portfolio consistent with the investment strategy, execute deals at optimum market
prices, maintain databases to facilitate fixed income activities and maintain record of all
approvals and exceptions record.
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 ISLAMIC BANKING DEPARTMENT
a) To strengthen the regulatory and Shariah compliance framework for Islamic banking
industry
b) To adopt/adapt prudential standards issued by IFSB
c) To adopt/adapt Shariah standards issued by AAOIFI to harmonize the Shariah practices
in Pakistan.
d) To steer/facilitate the SBP Shariah Board meetings, and Shariah Advisors’ Forum
e) To facilitate Shariah compliance inspection conducted by BID
f) To review products offered by Islamic banking institutions and develop products for
liquidity management of Islamic banking industry.
g) To coordinate with BPRD on the matters related to licensing, and FPT of the Heads of
Islamic banking institutions.
h) To collaborate with ICAP for the adoption of accounting standards issued by AAOIFI
i) To leverage support from international infrastructure institutions dealing with Islamic
finance i.e. IFSB, IDB/IRTI, AAOIFI and IIFM for promotion of Islamic banking in
Pakistan.
j) To facilitate research studies conducted by various international institutions dealing with
Islamic finance like IFS, IDB/IRTI, IIFM, AAOIFI etc.
k) To develop/implement capacity building programs for the promotion of Islamic banking
l) To conduct awareness programs
m) To undertake focused research initiatives by conducting empirical and theoretical studies
n) To prepare issue based policy notes on Islamic banking
o) To create and maintain repository of domestic and international developments regarding
IBIs.
p) To prepare Islamic Banking Bulletin and provide feedback related to Islamic Banking on
various in house publications.
q) To manage/analyze data related to Islamic banking industry in Pakistan
36
r) To develop Guidelines for broadening the access of Islamic financial services to

underserved areas
s) To prepare annual departmental business plan and budget by incorporating the
developmental initiatives undertaken by the department
 MONETARY POLICY DEPARTMENT
MISSION STATEMENT
To produce high quality research based analysis for formulation of monetary policy.
FUNCTIONS AND RESPONSIBILITIES
The Department has three divisions. The functions, responsibilities of all three divisions are
outlined below
MACROECONOMIC FRAMEWORK AND FORECASTING DIVISION
The main responsibility of this division is to prepare forecasts of key macroeconomic variables
such as inflation, exports, imports, exchange rate, money demand etc to support and enhance the
forward looking aspect of monetary policy formulation. Based on these forecasts the division
also prepares a one-year-ahead integrated system of macroeconomic accounts using financial
programming approach, thus producing consistent projections, on monthly basis, of all the four
sectors – real, external, fiscal, and monetary – of the economy.
POLICY FORMULATION DIVISION

This division is responsible for analyzing domestic and global developments related to the
formulation and implementation of monetary policy. In particular, keeping in view the SBP’s
monetary policy stance, it closely monitors liquidity position in the market and related
developments such as Open Market Operations (OMOs), T-bill auctions, movements in short-
37
term interest rates, and behavior of nominal and real exchange rate.
MONETARY AND CREDIT ANALYSIS DIVISION
This division keeps track of major developments in various components of monetary aggregates
such as government borrowings from the banking system, private sector credit, commodity
operations, currency in circulation etc. The division is also responsible for coordinating with
other departments of SBP to prepare extensive material for consultations with the IMF and
review missions related with the recent Stand-by Arrangement (SBA). In addition, the division
contributes in the quarterly working paper prepared for the Private Sector Credit Advisory
Council (PSCAC) meetings and the background working paper for the quarterly meeting of the
Monetary and Fiscal Policies Coordination Board (MFPCB).
OFFICE OF THE CORPORATE SECRETARY
The Office of the Corporate Secretary organizes meetings of the Central Board and its
Committees and ensures compliance with statutory and regulatory requirements for effective
implementation of the Board’s decisions. The Corporate Secretary is responsible for ensuring
effective Corporate Governance standards in the organization, and ensures that the relevant
information is available to the Board members, in order to facilitate the informed decision-
making.
The Corporate Secretary serves as Secretary to the Central Board of SBP and Board of Directors
of SBP Banking Services Corporation (SBP-BSC). She also serves as Secretary to all
Committees of the SBP Board and Audit Committee of SBP-BSC Board in line with the good
corporate governance practices, so as to ensure an enhanced level of coordination among the
Board and its Committees. Further, the Office also provides secretarial services to the key
management consultation forums of the Bank i.e. the Corporate Management Team (CMT) and
CMT-Head of Departments forum.
38
The Office also interfaces with the Federal Government on the matters related to
Governor/Deputy Governors and Directors of the Board. It provides protocol services to the
Governor, Deputy Governors and visiting dignitaries and facilitates Board members in their
travel & boarding arrangements. It also corresponds with the foreign central banks and
international financial institutions to notify any change in the office of the Governor.
 PAYMENT SYSTEMS (OPERATIONAL ASPECTS)

DEPARTMENT
FUNCTIONS OF PAYMENT SYSTEMS DEPARTMENT
On becoming fully functional, the department will carry out following:
Formulate payment systems’ policies and facilitate adoption of international best practices.
a) Introduce developmental strategies for modern payment systems.

b) Operate real time gross settlement (RTGS) system for fund transfers & securities
transactions efficiently and securely.
c) Provide oversight to payment systems operated by others i.e. NIFT, ECH etc.
d) Provide SWIFT services to internal departments and SBP BSC (Bank) Offices.
e) SBP Real Time Gross Settlement System (RTGS) Project
 RESEARCH DEPARTMENT
INTRODUCTION
Research Department is one of the core departments of the State Bank of Pakistan. It helps the
management in the process of policy making by providing in-depth analysis of economy of the
country. It has been entrusted to undertake the following specific functions
a) Explore new avenues for economic research focused on the Pakistan’s economy within
and outside the department;
b) Writing technical and non-technical research papers to support policy making and
promote dialogue;
39
c) Publishing SBP Research Bulletin (a bi-annual research journal) and SBP’s Working
Paper Series;
d) Organizing two seminar series: a weekly in-house ‘Readers Forum’ and the occasional
‘Pakistan and the World Economy Seminar;
e) Organizing an annual conference;
f) Urdu translation of publications including annual and quarterly reports, monetary policy
statements and financial stability review;
Liaising with international financial institutions (like IMF/World Bank), international
organizations (like G-24/SAARCFINANCE) and providing services to major
stakeholders;
g) Serving as SAARCFINANCE Country Cell for Pakistan
h) Developing general equilibrium models suited for the Pakistan’s economy.
To carry out these functions, the department is sub-dived into four divisions each focusing
around an appropriately defined theme.
 S TATISTICS AND DATA WAREHOUSE DEPARTMENT
INTRODUCTION
Statistics and Data Warehouse Department is a core department of the State Bank of Pakistan.
Mr. Zahid Hussain, the founder Governor of the State Bank of Pakistan, established it in the late
1949. This department has been responsible for collection, compilation and dissemination of
statistics on economic, financial and monetary aspects most pertinent to the central banking. The
Department is primarily engaged in collecting and compiling data of various periodicity on
money and banking, international trade, monetary accounts, balance of payments, exchange
rates, external reserves, foreign direct investment and private external debt etc and the various
data tables are disseminated through website. The department regularly brings out three monthly,
one bi-annual and eight annual publications. The department has a central role in providing
statistical data to the Government, policymakers, academia and other stakeholders.
MAIN FUNCTIONS
40
 Publications
 Data Tables
 Advance Release Calendar
 Metadata
 Data Reporting Guides
 Link to IMF Compilation Guides
 Two Days Workshop on Collaboration Among Data Compilers and Users
 One day seminar on Contributions and achievements of Official Statistics
 Data Collection Software - Download ( ZIP Format)
 Circulars
 Training on Foreign Liabilities & Assets and Flow of Funds Accounts - Reporting Issues
 Seasonal Adjustment Methodology
TREASURY DEPARTMENT
FUNCTIONS
 To arrange execution and settlement of MM, FX and Fixed Income trade

 To record the change in NAV
 Accounting, reconciliation, independent verification of valuation on Foreign
Currency
 Execution of international FCY payments on behalf of GoP and SBP itself
 Issuance of MIS on consolidated reserve management portfolio to SBP management,
SBP IC and committees of Central Board etc.
 Nostro Accounts Administration and Cash Management Operations
 Participation in automated solutions
 IMF Communication to SBP relevant departments
 Continuously find avenues to automate
 To manage business functionality of SWIFT
 Coordinating with different auditors related to reserve management operations
41
STATE BANK OF PAKISTAN (BSC) DIVISIONS

Established under the SBP-BSC Ordinance 2001, SBP-BSC 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-BSC 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-BSC, chaired by the Governor SBP, comprises of all members of the
Central Board of SBP and the Managing Director of SBP-BSC.
SBP-BSC consists of 16 field offices in Pakistan with the head office in Karachi.
42
FIGUR
CORE FUNCTIONS OF STATE BANK OF PAKISTAN

REGULATION OF LIQUIDITY
Being the Central Bank of the country, State Bank of Pakistan has been entrusted with the
responsibility to formulate and conduct monetary and credit policy in a manner consistent with
the Government’s targets for growth and inflation and the recommendations of the Monetary and
Fiscal Policies Co-ordination Board with respect to macro-economic policy objectives. The basic
objective underlying its functions is two-fold i.e. the maintenance of monetary stability, thereby
leading towards the stability in the domestic prices, as well as the promotion of economic
growth.
To regulate the volume and the direction of flow of credit to different uses and sectors, the
Bank makes use of both direct and indirect instruments of monetary management. Until
43
recently, the monetary and credit scenario was characterized by acute segmentation of credit
markets with all the attendant distortions. Pakistan embarked upon a program of financial sector
reforms in the late 1980s. A number of fundamental changes have since been made in the
conduct of monetary management which essentially marked a departure from administrative
controls and quantitative restrictions to market-based monetary management. A reserve money
management program has been developed. In terms of the program, while use in now being
made of such indirect instruments of control as cash reserve ratio and liquidity ratio, the
program’s reliance is mainly on open market operations.
REGULATION AND SUPERVISION
One of the fundamental responsibilities of the State Bank is regulation and supervision of the
financial system to ensure its soundness and stability as well as to protect the interests of
depositors. The rapid advancement in information technology, together with growing
complexities of modern banking operations, has made the supervisory role more difficult and
challenging. The institutional complexity is increasing, technical sophistication is improving
and technical base of banking activities is expanding. All this requires the State Bank for
endeavoring hard to keep pace with the fast-changing financial landscape of the country.
Accordingly, the out dated inspection techniques have been replaced with the new ones to have
better inspection and supervision of the financial institutions. The banking activities are now
being monitored through a system of ‘off-site’ surveillance and ‘on-site’ inspection and
supervision. Off-site surveillance is conducted by the State Bank through regular checking of
various returns regularly received from the different banks. On other hand, on-site inspection is
undertaken by the State Bank in the premises of the concerned banks when required.
To deepen and broaden financial markets as also to diversify the sources of credit, a number of
non-bank financial institutions (NBFIs) were allowed to increase substantially. The State Bank
has also been charged with the responsibilities of regulating and supervising of such institutions.
The "Prudential Regulations" for banks, besides providing for credit and risk exposure limits,
prescribe guide lines relating to classification of short-term and long-term loan facilities, set
criteria for management, prohibit criminal use of banking channels for the purpose of
44
money laundering and other unlawful activities, lay down rules for the payment of dividends,
direct banks to refrain from window dressing and prohibit them to extend fresh loan to
defaulters of old loans. The existing format of balance sheet and profit-and-loss account has
been changed to conform to international standards, ensuring adequate transparency of
operations. Revised capital requirements, envisaging minimum paid up capital of Rs.5 billion
have been enforced. Effective December, 1997, every bank was required to maintain capital and
unencumbered general reserves equivalent to 8 per cent of its risk weighted assets.
The "Rules of Business" for NBFIs became effective since the day NBFIs came under State
Bank’s jurisdiction. As from January, 1997, modarbas and leasing companies, which are also
specialized types of NBFIs, are being regulated/ supervised by the Securities and Exchange
Commission (SECP), rather than the State Bank of Pakistan?
EXCHANGE RATE MANAGEMENT AND BALANCE OF PAYMENTS
One of the major responsibilities of the State Bank is the maintenance of external value
of the currency. In this regard, the Bank is required, among other measures taken by it, to
regulate foreign exchange reserves of the country in line with the stipulations of the
Foreign Exchange Act 1947. As an agent to the Government, the Bank has been authorized to
purchase and sale gold, silver or approved foreign exchange and transactions of Special Drawing
Rights with the International Monetary Fund under sub-sections 13(a) and 13(f) of Section 17 of
the State Bank of Pakistan Act, 1956.
The Bank is responsible to keep the exchange rate of the rupee at an appropriate level and
prevent it from wide fluctuations in order to maintain competitiveness of our exports and
maintain stability in the foreign exchange market. To achieve the objective, various
exchange policies have been adopted from time to time keeping in view the prevailing
circumstances. Pak-rupee remained linked to Pound Sterling till September, 1971 and
subsequently to U.S. Dollar. However, it was decided to adopt the managed floating
exchange rate system w.e.f. January 8, 1982 under which the value of the rupee was
determined on daily basis, with reference to a basket of currencies of Pakistan’s major trading
partners and competitors. Adjustments were made in its value as and when the circumstances so
warranted. During the course of time, an important development took place when Pakistan
45
accepted obligations of Article-VIII, Section 2, 3 and 4 of the IMF Articles of Agreement,

thereby making the Pak-rupee convertible for current international transactions with effect from
July 1, 1994.
After nuclear detonation by Pakistan in 1998, a two-tier exchange rate system was introduced
w.e.f. 22nd July 1998, with a view to reduce the pressure on official reserves and prevent the
economy to some extent from adverse implications of sanctions imposed on Pakistan. However,
effective 19th May 1999, the exchange rate has been unified, with the introduction of market-
based floating exchange rate system, under which the exchange rate is determined by the
demand and supply positions in the foreign exchange market. The surrender requirement of
foreign exchange receipts on account of exports and services, previously required to be made to
State Bank through authorized dealers, has now been done away with and the commercial banks
and other authorized dealers have been made free to hold and undertake transaction in foreign
currencies.
As the custodian of country’s external reserves, the State Bank is also responsible for the
management of the foreign exchange reserves. The task is being performed by an Investment
Committee which, after taking into consideration the overall level of reserves, maturities
and payment obligations, takes decision to make investment of surplus funds in such a manner
that ensures liquidity of funds as well as maximizes the earnings. These reserves are also being
used for intervention in the foreign exchange market. For this purpose, a Foreign Exchange
Dealing Room has been set up at the Central Directorate of State Bank of Pakistan and services
of a ‘Forex Expert’ have been acquired.
DEVELOPMENTAL ROLE OF STATE BANK
The responsibility of a Central Bank in a developing country goes well beyond the regulatory
duties of managing the monetary policy in order to achieve the macro-economic goals. This role
covers not only the development of important components of monetary and capital markets but
also to assist the process of economic growth and promote the fuller utilization of a country’s
resources.
Ever since its establishment, the State Bank of Pakistan, besides discharging its traditional
functions of regulating money and credit, has played an active developmental role to promote
46
the realization of macroeconomic goals. Accordingly, the orthodox central banking functions
have been combined by the State Bank with a well-recognized developmental role.
The scope of Bank’s operations has been widened considerably by including the economic
growth objective in its statute under the State Bank of Pakistan Act 1956. The Bank’s
participation in the development process has been in the form of rehabilitation of banking system
in Pakistan, development of new financial institutions and debt instruments in order to promote
financial intermediation, establishment of Development Financial Institutions (DFIs), directing
the use of credit according to selected development priorities, providing subsidized credit,
and development of the capital market.
47
VISION AND MISSION STATEMENTS
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 objective.
MISSION
To provide excellent banking and financial services to stakeholders besides ensuring

implementation of SBP policies in order to command their trust and respect
48
CORE VALUES
INTEGRITY
 We stand behind our commitments
 We perform our duties professionally and without personal bias
 We perform our duties in an objective, non-partisan and non-ideological
 We protect the confidence of individual and the confidentially of information we
receive
 We do not use our position to personal advantage
ACCOUNTABILITY
 We take responsibility for our actions and decisions
 We take responsibility for achieving goals and outcomes
 We hold ourselves to the highest standards of transparency and public disclosure

 We welcome independent review against international standards of best practice
 We are ready to explain to affected parties the underlying rationale for decisions
TEAM WORK
 We share ideas and knowledge and respect the views of others
 We share the workload to leverage each others strength to achieve team goals
 We give credit where credit is due
49
 We subordinate our personal interests to those of the team

 We delegate and trust others to deliver
COURAGE
 We are willing to make difficult decisions and to take and manage appropriate risks
 We acknowledge and accept mistakes
 We give and accept constructive criticism
 We are prepared to change conventional thinking
 We stand on principal regardless of pressure
EXCELLENCE
 We are committed to continuous improvements
 We perform all tasks to the best of our ability and strive to be the best at what we do
 We are committed to doing the job right the first time, as effectively and efficiently as
possible
 We are forward looking and flexible in our approach
 We solve rather than avoid problems
RESULT ORIENTED
 We understand stakeholders needs and expectation
 We make timely decision
 We focus on objective and set priorities to achieve the most effective outcomes
 We are responsive in resolving conflicts to achieve objectives
 We enjoy challenging tasks and promote thinking outside the box to find solutions.
50
PART TWO
51
ORGANO-GRAM STATE BANK OF PAKISTAN
52
53
Board of Directors
The SBP is governed by a Board of Directors, which is responsible for the general supervision
and direction of the affairs of the Bank, other than the functions assigned to the Monetary Policy
Committee. The ten-member Board is chaired by the Governor SBP and comprising of eight
nonexecutive Directors and the Federal Secretary Finance. Non-executive members of the Board
are appointed by the Federal Government for a period of 3 years, under the SBP Act, 1956. The
Governor is also the Chief Executive Officer and manages the affairs of the Bank. Seven
meetings of the Board were held during FY17. One vacant position on the Board emerged
consequent to resignation of Mr. Zafar Masood.
Executive Management
The Governor being the Chief Executive heads the executive management. He is assisted by one
or more Deputy Governors. In addition to the Governor and Deputy Governors, the management
hierarchy includes Executive Directors, Chief Economic Advisor and departmental heads.
The Governor
The Governor is appointed by the President of Pakistan for a term of three years which is
renewable once. During the year, Mr. Ashraf Mahmood Wathra completed
his 3 year term as Governor on April 28, 2017 and Mr. Riaz Riazuddin, Deputy Governor
(Policy) was appointed as Acting Governor till appointment of the Governor. Subsequently, Mr.
Tariq Bajwa, the present Governor, was appointed on July 7, 2017 for a 3 year term.
Deputy Governors
The Governor is assisted by one or more Deputy Governors (DGs) appointed by the Federal
Government for a period not exceeding five years. Presently, Mr. Riaz Riazuddin and Mr.
54
Jameel Ahmad are serving as Deputy Governors since March 30, 2015 and April 11, 2017
respectively. Mr. Jameel Ahmad was serving as Executive Director (Banking Supervision
Group) before assuming responsibilities as DG. Earlier, Mr. Saeed Ahmad remained Deputy
Governor till March 2017. He was reappointed after completing his first term as DG on January
21, 2017, but he resigned after his appointment to another government institution.
Board of director
Mr. Tariq Bajwa, Governor, Chairman Board of Directors and Chairman Monetary Policy
Committee
A career civil servant by profession, Mr. Bajwa joined the Civil Service of Pakistan in 1981 and
assumed various Secretariat, Field and Staff assignments, including, among others, General
Manager PIA, Head of Pakistan's Trade Mission in Los Angeles, and Advisor Finance to the
United Nations Development Program (UNDP). Mr. Bajwa also served as Chairman, FBR for
over 2 years till October, 2015 before his appointment as Secretary, Economic Affairs Division.
His last assignment as Civil Servant was Secretary Finance from where he retired on June 18,
2017. He holds a Master's degree in Public Administration from Kennedy School of
Government, Harvard University, where he was awarded the prestigious Littauer Fellowship and
an LLB from the University of the Punjab, Lahore.
 Mr. Shahid Mahmood (Member, SBP Board since June 19, 2017) Secretary, Finance
Division, Government of Pakistan and ex-officio member of the SBP Board. Mr.
Mahmood has served as Additional Secretary (External Finance)/ Special Assistant to
Finance Minister, Special Secretary, Finance Division, and Principal Secretary to the
Chief Minister, Punjab. He holds a Master’s degree in English Literature from
Government College, Lahore, and a Bachelor’s degree in Economics & Statistics from
the same institution.
55

 Dr. Tariq Hassan (Member, SBP Board since March 22, 2016) Attorney and Advocate,
Supreme Court of Pakistan and Chairman, Audit Oversight Board. Dr. Hassan is a former
Chairman, Securities and Exchange Commission of Pakistan, and previously has also
served as advisor to the Finance Minister of Pakistan. He has also been associated as
legal Counsel with the World Bank in Washington, DC, International Fund for
Agriculture Development in Rome, and Shearman & Sterling in New York. In addition to
practicing law, he has been teaching law as an adjunct professor at George Washington
University and Fletcher School of Law & Diplomacy, USA; and Departments of Law at
LUMS University and International Islamic University, Pakistan. He did his PhD in
Juridical Science from Harvard University, USA.
 Hafiz Mohammad Yusuf (Member, SBP Board since March 22, 2016) A Chartered
Accountant by profession with professional experience of over 30 years. He has served as
Member SECP Board and President, Institute of Chartered Accountants of Pakistan,
besides holding other important responsibilities. He is Fellow member of Institute of
Chartered Accountants of Pakistan (FCA).
 Mr. Zubyr Soomro (Member, SBP Board since March 22, 2016) Educated at the

London School of Economics and SOAS, Zubyr Soomro has been a career international
banker with over 30 years at Citibank with assignments in the Middle East, Turkey, UK
and Pakistan. In 1997 he was appointed as Chairman and President of United Bank and
tasked with restructuring it for Privatization after which he stayed on to head Citibank’s
Pakistan franchise. He has been Chairman / President of Pakistan Banks Association,
American Business Council and OICCI. Currently he is the Chairman of the Pakistan
Microfinance Investment Company and on the Boards of Acumen, Grameen Foundation
USA, EFG Hermes, LRBT and Aitcheson College and a Member of the Finance
Minister’s Economic Advisory Council.
56
 Khawaja Iqbal Hassan (Member, SBP Board since March 22, 2016) A seasoned banker
who established a commercial bank and a leading investment banking firm, with 35
years’ experience in the financial sector. He is serving on the Boards of prominent public
and private enterprises. He has also served on many Task Forces established by the
Government of Pakistan. Mr. Hassan was awarded the Sitara-i-Imtiaz for his meritorious
contributions to national interest.
 Mr. Ardeshir Khursheed Marker (Member, SBP Board since March 22, 2016) A
businessman by profession, Mr. Ardeshir Khursheed Marker is partner and Director at
Green Bean Coffee Company Ltd. He is also a partner in Merck Marker Pvt. Ltd. and
manages its financial and business development areas. Mr. Marker holds
a Masters Degree in Economics from the London School of Economics.
 Mr. Mohammad Riaz (Member, SBP Board since March 22, 2016) A public servant of
long standing, Mr. Mohammad Riaz has served as Secretary, National Assembly of
Pakistan. He has successfully undertaken various assignments at the Federal Board of
Revenue in the capacity as Member, Director General and Head of the Customs &
Excise. Mr. Riaz has also served as Counsel General of Pakistan at Turkey and
Commercial and Economic Counselor at Embassy of Pakistan in France. He holds
a Masters Degree in Development Economics from Williams College, USA. Mr. Sarmad
Amin (Member, SBP Board since March 22, 2016) A progressive entrepreneur and a
businessman, Mr. Sarmad Amin is a member of Lahore Chamber of Commerce and
Industry (LCCI) and All Pakistan Textile Mills Association (APTMA). He has remained
Vice President of LCCI and member Executive Committee of APTMA. Presently, Mr.
Amin is Chairman of Samin Textiles Limited besides being member of the Boards of
several conglomerates. He is also honorary Consul of the Republic of Austria for
Pakistan. He graduated from the University of the Punjab, Lahore.
57
Corporate Secretary:
The Corporate Secretary is the Secretary to the Board, Committees of the Board and the
Monetary Policy Committee (MPC) and acts as a focal person for communication between the
Board and the management. The position is responsible for recording the proceedings of the
meetings of the Board its Committees and MPC and ensuring compliance with statutory and
regulatory requirements for effective implementation of the Board’s decisions.
The Corporate Secretary is also responsible for ensuring effective Corporate Governance
standards and availability of relevant information to the Board and MPC members to facilitate
informed decision-making. In addition to the responsibilities of organizing meetings of the
Board, its Committees and MPC, the Corporate Secretary interfaces with the Federal
Government on matters related to the Governor, Deputy Governors, and Directors of the Board
and External Members of the MPC.
MANAGEMENT HIERARCHY
58
59
POLICY FORMULATION AND MEETINGS AT SBP

Policy of organization
SBP’s Functions are mainly governed by:
SBP Act, 1956 (as amended up to November 19, 2015)
Banking Companies Ordinance, 1962
Foreign Exchange Regulations Act, 1947
Payment System and Electronic Fund Transfer Act, 2007
Monetary policy:
Monetary Policy Statement September 29, 2018 Since the last meeting of the Monetary
Policy Committee in July 2018, Pakistan has witnessed notable changes on the political
front. This has had a positive impact on the business and consumer confidence in the
country as reflected in multiple surveys. The smooth transition between governments
addresses the political uncertainty observed hitherto, but concerns on the economic front
continue to persist on the back of rising inflation and large twin deficits, that are likely to
compromise the sustainability of the high real economic growth path. Inflation is inching
up, particularly from March 2018 onwards. So far, in the first two months of FY19,
headline CPI inflation has averaged 5.8 percent as compared to 3.2 percent for the
corresponding months of FY18, and an average of 3.9 for all of FY18. The jump is even
more pronounced in core inflation- a key measure reflecting the underlying inflationary
pressures in the economy. For FY19, SBP’s inflation projections show that the average
headline inflation is expected to fall in the revised forecast range of 6.5-7.5 percent. This
assessment takes stock of the following factors:
60
(i) A higher than anticipated increase in international oil prices.

(ii) An upward revision in domestic gas prices.
(iii) A further increase in regulatory duties on imports.
(iv) The continuing second round impact of previous exchange rate depreciations.
Following a healthy growth of 5.8 percent in FY18, economic activity is likely to slowdown in
FY19 as the general macroeconomic policy mix is focusing towards stabilization. Specifically,
the transmission of SBP’s policy rate hikes by 175 bps since January 2018 is still unfolding.
The government is also now pursuing a fiscal consolidation program and has further announced
regulatory measures to slowdown the growing pressures on the external front. As a result,
domestic demand is projected to decelerate in the coming months of FY19. The recent
monetary and fiscal measures are likely to affect Large Scale Manufacturing. Furthermore, the
latest information shows that cotton production is expected to miss its FY19 target of 14.4
million bales with downside implications for agriculture sector growth. The ancillary services
sector is expected to miss its FY19 target as well. Some positive impact is expected from the
contribution of exports led production and higher fertilizer production amidst depleting stocks
and better availability of energy. After incorporating the latest information on both demand and
supply, SBP projects the real GDP growth for FY19 at around 5.0 percent. The current account
deficit continues to pose a challenge. Despite some growth in workers’ remittances and exports
in the first two months of FY19, a notable increase in the value of oil imports has kept the
current account deficit at US$2.7 billion, as compared to US$2.5 billion, in the corresponding
period last year despite non-oil imports declining during the period. Owing to these
developments SBP’s net liquid FX reserves have declined to US$ 9.0 billion as of 19th
September, 2018 compared to US$ 9.8 billion at the end of FY18. Broad money supply saw a
seasonal contraction of 1.2 percent during 1st July to 14th September FY19 as compared to the
contraction of 0.9 percent during the same period last year. During this period, however, Private
Sector Credit (PSC)
61
performed relatively better. The main reasons for the continuing growth of PSC involve:
(i) the improved availability of energy;
(ii) Relatively conducive exports demand amid GSP plus status
(iii) The higher working capital needs due to capacity additions in the last three
years. Accordingly, PSC growth is expected to continue, but at a slower pace
than in FY18. Similarly, monetary growth is expected to remain between 10.5
to 11.5 percent in FY19.
In this backdrop, the Monetary Policy Committee noted that:
 while non-oil imports are responding to the contractionary measures a surge in oil prices
is masking this improvement, and as a result the current account deficit remains high;
 rising trends in inflation mean that real interest rates have fallen and further;
 the unfolding global developments, whether in terms of oil-price shocks, protectionist
trade policies and/or falling flows to the emerging markets, all pose challenges to
macroeconomic management in Pakistan. In light of the current and evolving
macroeconomic situation discussed above, the MPC is of the view that further
consolidation efforts are required to ensure macroeconomic stability and therefore has
decided to raise the SBP target policy rate by 100 bps to 8.5 percent effective from 1st
October 2018.
MANAGERIAL POLICIES
Operational:
62
 The Personal Management Department (PMD) of SBP BSC has been continuously
striving for taking different HR initiatives in line with the management’s vision to
transform BSC as a vibrant and efficient organization. For the purpose it has been
striving for development of HR policies that are sustainable, capable of improving the
efficiency of the employees so as to optimize the HR utilization.
 Two policies one on ‘policy for protection of employees against workplace harassment to
comply with the ‘Protection against Harassment of Women at Workplace Act, 2010’
 and other on ‘Grievance Handling Policy’ in SBP BSC were introduced. These policies
aimed at providing more secure and comfortable working environment to BSC
employees in general and female employee in particularly for timely redressal of
grievances through proper communication and counseling of aggrieved employees.
Similarly, a number of awareness sessions on the said policy papers have also been
arranged at major field offices for the understanding of these policies.
CREDIT RATING
State Bank of Pakistan has been endeavoring to promote self-discipline in the financial markets
of Pakistan through transparency and sufficient disclosure by the market participants.
63
EMPLOYMENT OPPORTUNITIES AT SBP

There are numbers of employment opportunities at state bank of Pakistan. Currently state bank
has joined hands with National Testing Service for recruitment of efficient human capital. NTS
prepares and organizes test on the behalf of SBP.
REGULAR RECRUITMENT SCHEMES

Regular employment program includes two schemes.
 Entry Level Scheme

 Middle Management Level Scheme
Following designation hiring are being made under this scheme
 SBP Officials Training Scheme
(SBOTS – OG-2)/MTO
 Analysts (OG-2)
 Statistical Officers (OG-2)
RECRUITMENT ON NEED BASIS

Officers/Professionals are recruited in traditional and non-traditional areas at various levels
Need base recruitment in traditional areas
 Financial Audit Professionals

 IT Auditors
 Finance Specialist
 Banking areas
 Advisors
64
Need base recruitment in non-traditional areas
 Librarians
 Professionals for Museum
 Editors
 Translators
 Media Professionals
RECRUITMENT FOR PROFESSIONALS

Separate Salary Structure for Specialized Professionals (SSSSP) was introduced to:
1. Attract Professionals in specialized areas at market base pay

2. Fill Skill Gape at various Levels of hierarchy
 Entry Level
 Middle Level
 Higher Level
 M1 and M2
 No fresh appointments are being made.
65
RECRUITMENT PROCESS FOR SBOTS
RECRUITMENT PROCESS FOR ANALYST
66
RECRUITMENT PROCESS FOR STATISTICAL OFFICERS
NEW GRADES AND SALARY STRUCTURE

Sr. no. Grade Min(Rs) Max(Rs)
1 OG-2 34,000 79,350
2 OG-3 55,000 131,000
3 OG-4 78,000 183,000
4 OG-5 111,000 258,000
5 OG-6 182,000 424,000
6 OG-7 260,000 605,000
7 OG-8 289,000 675,000
All recruitments are subjected to Quota Guidelines as per Federal Government directives
issued from time to time:
Region/Province wise Quota share as on 12-2-12
67
Merit 7.5% Punjab 50%

Sindh-U 7.6% Sindh-R 11.4%
KPK 11.5% Baluchistan 6%
FATA 4% AJK 2%
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PART THREE
MARKETING MIX OF SBP
PRODUCTS AND SERVICES:

 SBP involves in the manufacturing and distribution of Bank Notes and coins.
 It handles the instrument of CDNS which are National prize bonds, Premium Prize Bonds
and different securities like SSC and DSC.
 It also handles the accounts of Government and commercial banks.
 Make policies to control the inflation.
 It also provides services for the encouragement of exports.
DISTRIBUTION CHANNEL
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Most of the operational activities are performed by Banking Service Corporation (BSC) and
NBP.
For the distribution of currency, commercial banks are its distribution channel.
PROMOTION:
SBP is not actually involved in the marketing activities actively. It arranges the awareness
seminars and different programs for the purpose of dissemination of information. A seminar on
the security features of bank notes so that people can differentiate between the real and a fake
note (as there are many forge notes in the circulation).
It has recently launched a program “National Financial Literacy Program” to promote financial
inclusion through spreading financial education for inclusive economic growth and stability
across the country.
The Program intends to target middle income households and youth through building
partnerships with education institutions in a phased manner. The program envisions educating
around 0.5 million low income households in first phase.
The key objectives of the program are:
 Imparting knowledge and understanding of, financial concepts, banking/financial

products and services
 Develop skills and attitudes towards budgeting, savings, investment, debt management,
financial negotiation, rights and obligations, etc.
 Facilitate behavioral changes and practices to improve financial outcomes; including

financial wellbeing through increased savings, improved debt management, perceived
financial stress or satisfaction
70
PART FOUR
71
FINANCIAL ANALYSIS OF STATE BANK OF

PAKISTAN
While assessing the financial position of any organization’s (in evaluating the internal resources)
one should be very careful about the figures because mostly the organization based on its
financial structure and the right effective and efficient allocation of money to different needs.
Best technique in this regard is of trend analysis and ratio analysis, which without many
complexities provides as an increase look of the company.
RATIO ANALYSIS
 CURRENT RATIO
The current ratio is a liquidity and efficiency ratio that measures a firm's ability to pay off its
short-term liabilities with its current assets.
Current Ratio = Current Assets
Current Liabilities
72
Year 2014 2015 2016 2017 2018

Current Assets 3,7876,846 40,635,754 47,810,651 50,746,464 50,042724
Current 5,900,571 5,752,762 5,332,294 5,657,276 5,074,430

liability
6.41 7.06 8.96 8.97 9.86
INTERPRETATION:
Changes in a company's current ratio over a period of years can point out problems and
successes. A declining current ratio could be pointing to financial problems. An improving ratio
could be the result of a brighter financial picture or an overstocked warehouse (inventory is
considered an asset). The key here is to find out why a ratio has changed.
As the current ratio of the organization is increasing over the period of last 5 years it is showing
the strong financial position of the organization.
73
 DEBT- TO- TOTAL ASSETS:

It shows the extent to which the firm is using borrowed money.
Formula:
Debt-To-Total Asset = Total debt/total Assets
Year 2014 2015 2016 2017 2018

Total debt 48,419,422 51,241,582 58,879,292 60,855,416 59,902,939
Total asset 49,419,422 52,241,582 59,879,292 61,855,416 60,902,939
Ratio 0.93 0.980 0.983 0.9838 0.9835
INTERPRETATION:
74
The number tells what portion of assets is paid for with borrowed money. Companies with a high
debt to assets ratio may have trouble borrowing any more money or may have to pay a higher
interest rate on a loan than it would if its ratio were lower.
It means that out of 1, 0.983 is the debt on the organization.
 DEBT TO EQUITY RATIO

Debt to equity ratio = Total Liabilities
Total Owners equity
Year 2014 2015 2016 2017 2018
Total Liabilities 48,419,422 51,241,582 58,879,292 60,855,416 59,902,939
Total Owner’s 1000,000 1000,000 1000,000 1000,000 1000,000

equity
Debt to equity 48.41 51.24 58.87 60.85 59.90

ratio
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INTERPRETATION
It is favorable in nature as the total liabilities are more financed by equity as compared to
previous year. The burden of debt decreases over the time
 EARNINGS PER SHARE

Net income
Earnings per Share =
Total Common Shares Outstanding
Year 2014 2015 2016 2017 2018
Net Income 50,109,000 50,491 40,027,000 41,572,000 35,819,000
No. of common 1000,000 1,000,000 1,000,000 1,000,000 1000,000

shares
EPS 50.10 50.49 40.02 41.57 35.81
76
INTERPRETATION
A higher EPS is the sign of higher Earnings, strong financial position and, therefore, a reliable
company to invest money.
There is a fluctuation in the EPS over the five years but by comparing to 2014 in 2018 it is
decreasing.
 NET ASSET PER SHARE
Net Asset per Share = Net Asset Value
No. of Shares
Year 2014 2015 2016 2017 2018
Net asset value 49,419,422 52,241,582 59,879,292 61,855,416 60,902,939
77
No. of shares 1000,000 1000,000 1000,000 1000,000 1000,000
49.41 52.24 59.87 61.85 60.90
NAVPS of the SBP 2018 is 60.90 which is less than 2017. There is increasing trend in net asset
per share as the value of assets is financed by owners’ equity. There is an increasing trend in
ratios as compared to the previous year only there is fluctuation in 2017.
 RETURN ON ASSETS
It measures the overall effectiveness of management in generating profits with its available
assets. The higher the Return on total assets better will be the performance.
Earnings available for common stockholders /
Return on Assets (ROA) Average Total assets
78
Year 2014 2015 2016 2017 2018
Net income 50,109 50,491 40,027 41,572 35,819
Total asset 49,419,422 52,241,582 59,879,292 61,855,416 60,902,939
ROA .096 .0966 .066 .067 .058
INTERPRETATION
The return on investment of the SBP is .058 in 2018. It is less than the previous year. It shows
that bank generates Rs.058 for each Rs. 100 of the investment which is very poor for the SBP
progress. This ratio is also less than the previous year
79
HORIZONTAL ANALYSIS
80
BALANCE SHEET HORIZONTAL ANALYSIS
(Rupees in 000)
Balance sheet 2015 2016 2017 2018 2014- 2015- 2016- 2017-
items 15 16 17 18
Assets
Current 40,635,754 47,810,65150,746,464 50,042,72 7.28 17.66 6.14 $
account with (0.01)
the State Bank
of Pakistan
Investments 571,720 525,525 532,178 521,419 0.4 -8.08 1.27 $
(0.02)
Employee 10,577,857 10,853,432 9,481,894 9,152,123 0.006 2.61 -12.6 $
loans (0.03)
Advances, 39,107 64,601 49,581 100,983 21.14 65.2 - $
deposits and 23.25 1.04
prepayments
Medical and 132,479 138,878 164,822 190,334 5.93 4.83 18.68 $
stationery 0.15
consumables
Property and 284,665 486,205 880,477 895,356 19.67 70.8 81.09 $
equipment 0.02
Total assets 52,241,582 59,879,292 61,855,416 60,902,93 5.71 14.6 3.3 $
(0.02)
LIABILITIES
Deposits and 5,752,762 5,332,294 5,657,276 5,074,430 -2.5 -7.31 6.09 $
other liabilities (0.10)
Deferred liab.
81
unfunded staff 45,488,820 53,546,998 55,198,140 54828509 6.99 17.71 3.08 $

retirement (0.01)
benefits
Total liabilities 51,241,582 58,879,292 60,855,416 59,902,93 5.83 14.9 3.36 $
(0.02)
Share capital 1,000,000 1,000,000 1,000,000 60,902,93 0 0 0 $

(0.02)
PROFIT AND LOSS STATEMENT HORIZONTAL ANALYSIS
Rupees in 000’
Profit and loss 2015 2016 2017 2018 2014- 2015- 2016- 2017-
statement 15 16 17 18
items
Discount and 48,573 38,008 31,352 31,315 -0.68 - -17.51 0.00
interest 21.75
earned
Net operating 14,179,759 13,955,950 12,495,13 14,917,727 1.43 -1.58 -10.47 0.19
expenses 8
Reimbursabl 6,873,983 7,544,251 7,423,955 8,544,648 -3 9.75 -1.59 0.15
e from the
State Bank of
Pakistan
Allocated to 7,305,776 6,411,699 5,071,183 6,373,079 5.98 12.24 20.91 0.26
the State
82
Bank of
Pakistan
Operating 48,573 38,008 31,352 31,315 -0.68 21.75 17.51 0.00
profit
Gain on 1,263 1,123 10,220 4,504 943.8 11.08 0.810 -0.56
disposal of
property and
equipment
Other income 655 896 - - 39.41 36.79 - -
Profit for the 50,491 40,027 41,572 35,819 0.76 20.72 3.86 -0.14
year
83
VERTICAL ANALYSIS
BALANCE SHEET VERTICAL ANALYSIS
(Rupees in 000)
Balance sheet 2015 2016 2017 2018 2015 2016 2017 2018
items
Assets
Current account 40,635,754 647,810,651 50,746,464 50,042,72 77.78 79.8 82.04 $
with the State 82.00
Bank of Pakistan
Investments 571,720 525,525 532,178 521,419 1.094 0.87 0.86 $

0.01
Employee loans 10,577,857 10,853,432 9,481,894 9,152,123 20.24 18.1 15.32 $
0.15
Advances, 39,107 64,601 49,581 100,983 0.0748 0.1 0.08 $
deposits and -
prepayments
84
Medical and 132,479 138,878 164,822 190,334 0.253 0.23 0.26 $

stationery -
consumables
Property and 284,665 486,205 880,477 895,356 0.55 0.81 1.42 0.01
equipment
Total assets 52,241,582 59,879,292 61,855,416 60,902,93 100 100 100 1
LIABILITIES
Deposits and 5,752,762 5,332,294 5,657,276 5,074,430 11.01 8.9 9.14 0.08
other liabilities
Deferred liab. 45,488,820 53,546,998 55,198,140 54,828,50 87 89.42 89.23 0.9

-unfunded staff
retirement
benefits
Total liabilities 51,241,582 58,879,292 60,855,416 59,902,93 101.9 98.32 98.38 0.98
Share capital 1,000,000 1,000,000 1,000,000 1,000,000 2.19 1.67 1.61 0.02
85
PROFIT AND LOSS STATEMENT VERTICAL ANALYSIS
Rupees in 000’
Profit and 2015 2016 2017 2018 2015 2016 2017 2018
loss
statement
items
Discount 48,573 38,008 31,352 32,315 96.2 94.95 75.42 0.9
and interest
earned
Net 14,179,75 13,955,95 12,495,13 14,917,7 28083.7 34866 30056. 416.5

operating 9 0 8 27 .3 6
expenses
Reimbursa -6,873,983 - - - - - -17858 -239
ble from the 7,544,251 7,423,955 8,544,64 13614.2 18848
State Bank 8
of Pakistan
Allocated to -7,305,776 - - 6,373,07 - - -12199 -178

the State 6,411,699 5,071,183 9) 14469.5 16018
Bank of
Pakistan
Operating 48,573 38,008 31,352 31,315 96.2 94.95 75.42 0.9

profit
Gain on 1,263 1,123 10,220 4,504 2.5 2.806 24.58 0.1

disposal of
property
86
and
equipment
Other 655 896 - - 1.29 2.238 - 0

income
Profit for the 50,491 40,027 41,572 35,819 100 100 100 1
year
87
PART FIVE
88
SWOT ANALYSIS
SWOT analysis is one of the most important steps in formulating strategy using the organization
mission as a context, managers assess internal strengths distinctive competencies and weakness
and external opportunities and threats. The goal is to then develop good strategies and exploit
opportunities and strengths neutralize threats and avoid weaknesses.
STRENGTHS:
 The structure of verification, authorization, checking and counter checking of
transactions is very sophisticated, reliable and strong. This is the major reason why fraud
and false payment cases are rare in SBP-BSC.
 Employees of SBP-BSC enjoy good salary packages and benefits. For example interest
free loans are given for building house and buying a car, etc. Employees feel secure
because of the permanent nature of the job. Therefore, as young and talented candidates
opt for SBP-BSC posts. Senior employees enjoy more benefits in the form of recognition
and other fringe benefits which work to retain them.
 The employees at SBP are strict followers of rules & regulations imposed by the
organization. So, the disciplined environment bolsters its image and also enhances
overall output.
 The employees are highly skilled Professionals, these competencies enable the
employees to understand and perform functions efficiently.
 SBP is an independent organization. It has its own Governor and its own policies and
regulations.
 This organization is very transparent in performing its actions, therefore, chances of

corruption are less. In case of any fraud, an employee can be easily caught as they can
89
verify him/her through their signatures. Secondly, everybody gets a job on the merit basis
and the employee’s performance is evaluated every year and on the basis of that an
employee gets promoted. There’s a proper job rotation done for an employee so that he
stays motivated and learns the maximum.
WEAKNESS:
 Unlike most of the Central Banks of other countries SBP-BSC is not updated with
technology. The GLOBUS software used is not updated. Computers and GLOBUS
software were introduced in 2003 and they are in the same form, not updated. This causes
system freezes and hang ups and hence time wastage.
 It lacks in the marketing effort. A need of aggressive marketing is now becoming the part
of every organization.
 There is strong political pressure on the bank that is affecting banks in a negative way.
 The workload of the employees is not evenly distributed. This serves as a demotivation
for employees who work above average.
 The bonuses and promotions are often powered by the senior’s favoritism or depend
upon their wills and decision. This affects their performance negatively.
 There has been a big gap because of late recruitment that why some departments lack of
human resource.
 Some of the workers are demotivated due to their promotion quota. This could cause a
problem, as demotivated workers are not efficient. Also, many senior workers remain at
low grade since they are not familiar with the new system such as EORS.

 The political leaders, create pressure on the organization and influence in policies and
regulations for its own benefits it’s created problems for the SBP to regulate
independently.
90
OPPORTUNITIES:
 It can adopt latest IT programs to enhance the speed and efficiency of the organization.
 There is a great opportunity for SBP-BSC to invest in the latest technology. By

introducing latest and modern machinery, it can reduce the manual working.
THREATS:
 Excessive borrowings by the government is making difficult for SBP to maintain foreign
exchange reserves.
 Frequently changing governments and their policies harm the functionality and
consistency of SBP-BSC policies.
 A huge amount of fake currency is floating in the market which is causing inflation in the
economy and is devaluing rupee. Fake money makers have improved the quality of their
fake notes and it is hard for general public to distinguish them from original currency
notes.
 Forged prize bonds in the market
91
PART SIX
92
TRAINING PROGRAM
DURATION OF INTERNSHIP
The starting and ending dates are as follow:
Starting date Ending date
9 July 2018 17 august 2018
INTERNSHIP PLAN 2018 LAHORE OFFICE

First week of internship has been comprised of orientation in different divisions of SBP Lahore
Office. Those departments include:
3. Admin department
4. Engineering department
5. Cash, issue and treasury division
6. Prize bond division
7. Securities division
8. Banking division
9. FEOD
10. FEAD
11. DFD
They have gave the introduction of sub unit of the relevant departments, hierarchy of the
departments and explained that how there functions are being performed.
93
After that (week 02) they have allotted me Foreign Exchange Operational division for training.
There I have worked on a project “SIGNIFICANCE OF EORS” and “IMOACT OF
SUBSIDIES ON EXPORTS” for further 4 weeks.
In the last week, I have presented all the outcomes, feedbacks and suggestions concerning that
project.
The Complete internship program along dates is as follow:
Date Divisions
10/07/18 Admin , engineering division
11/07/18 Cash, issue and treasury division

Week 01
12/07/18 Prize bond and securities division
(orientation)
13/07/18 Banking division
16/07/18 FEOD, FEAD, DFD
Week 02
Week 03
Week 04
Foreign Exchange Department
Week 05
Week 06 Presentation
94
FOREIGN EXCHANGE OPERATION DIVISION (FEOD)
Mission Statement of FEOD:
To oversee the operations of Authorized Dealers in line with the regulations with
emphasis on facilitating business activities and to promptly provide necessary data to all
stakeholders. (Sbp, 2018)
Vision Statement of FEOD
To transform FEOD into a dynamic department with a view to provide quality

services in the area of foreign exchange in an efficient manner to the utmost satisfaction of
all the stakeholders within the given regulatory framework. (Sbp, 2018)
Foreign Exchange Operations Department (FEOD) is responsible for facilitating the

foreign exchange activities in the country. FEOD operates under the ambit of Foreign
Exchange Regulations Act 1947, Foreign Exchange Manual 2002 and various
instructions/circulars issued by the Exchange Policy Department (EPD) of SBP. The
organizational setup comprises of Foreign Exchange Operations Department (FEOD) located
at SBP BSC Head Office, Karachi and Foreign Exchange Operations Units (FEOUs) at
different Field Offices of the Corporation.
Being an operational arm of Exchange Policy Department (EPD), FEOD is mainly

responsible for monitoring the repatriation of export proceeds, granting approvals for
commercial, private and Government foreign exchange remittances, processing of
applications under various Subsidy Schemes introduced by the Government for exporters,
etc. and collection & analysis of various returns / data on foreign exchange-related
transactions in the country.
Page | 95
Sub-Units of FEOD:
Following are the sub-units of FEOD working in collaboration of each other. More details
are mentioned bellow:
E
u
d
e
v sIc
rtO
o
p
x
m
y
a
n
A
E xp
liS
b
r t a p
o
O erd
v u
e
A d van ce
p aym en
Im p
ts
o rts
ro vals Exp o
Su b
rts
ap ro
sid ies
va ls
Imports approvals:
 Bank guarantee/ Hajj/ Umrah guarantee

 Remittances outward
 Import Advance payments
 F.E allocation
Subsidies:
 DLTL textiles / Non-textiles schemes

 Sugar/ Wheat subsidy schemes and cases
Page | 96
Export Overdue:
 Adjudication court judgments

 EPRC
 Realization of Exports Earnings
 Reply to Show Cause notices
 Export shipping documents
 Re-lodgment of overdue cases
 E-form verification/ EE-EF
Exports Approvals/legal cases:
 Software registration
 Advance payment time barred
 Advance payment Refund
 Overdue Adjustment against Advance payments
 Call center registration
Advance payments/returns:
 Advance payment returns

 Shipping documents of advance payments
 Court cases
 Revise returns
 Exchange companies inspection
Page | 97
PROJECT#1
SIGNIFICANCE OF EORS
EXPORTS
Exports play an important role in the economy as on this basis of imports and exports
we calculate the trade surplus/deficit. Without exports the nation will face heavy burden due
to outflow of money resulting in trade deficit. Therefore, by increasing exports we can bring
more money into the economy creating a multiplier effect. There are certain rules and
regulations designed by State bank of Pakistan (Foreign Exchange Regulation Act, 1947)
that one must follow to avoid legal proceedings against the exporter.
At a World Bank seminar on export competitiveness, Secretary Commerce Younus

Dagha — while admitting that Pakistan’s competitiveness has been under immense pressure
for some time — said the government was taking all possible measures to transform the
export-related challenges into opportunities.
“Investment in human resource and agriculture is imperative to make our products

more competitive in international markets”, he said
Export Regulations;
Exchange policies regarding exports cover all goods exported from Pakistan
irrespective of whether they are subject to license under the Export Trade Control
Regulations or not. Similarly, nothing in the Exchange policies relieves the exporters from
the necessity of complying with the Export Trade Control Regulations as laid down by the
Government from time to time, including the necessity of obtaining an export license
wherever necessary. The Government of Pakistan has under the exchange trade control
regulations.
Budget allocated to exports;
Page | 98
The government of Pakistan always focuses on the key factors to encourage exports, and
tries to allocate enough budgets for the betterment of this area. Having a glance upon the
budget allocation to certain sectors to encourage exports can prove this;
 Rs. 1300 million was allocated for freight subsidy on Sugar exports by TDAP in
2016-2017
 Rs. 5000 million was allocated to wheat sector in 2016-2017
 Rs. 33million was allocated to textile industry in 2016-2017
(Budget in brief, 2017)
 Rs. 1629 million was allocated for the exports of wheat in 2017-2018
 Rs. 1625 million was allocated for the exports of sugar in 2017-2018
(Budget in brief, 2018)
EXPORT ANALYSIS (2011-2018)

We have taken the data of previous 8years of the exports of Pakistan for our analysis.
The data is taken form the website of State Bank of Pakistan (Publication Data). The total
value of exports includes the data of following sectors
 Food group
 Textile group
 Petroleum group
 Other manufacture
 All others
Page | 99
The unit of the exports is taken as according to the data available on the website. (Thousand
US $)
Financial year Total exports (Thousand

US$)
2010-2011 24810400
2011-2012 23624300
2012-2013 24460500
2013-2014 25078000
2014-2015 24088998
2015-2016 21972008
2016-2017 22003050
2017-2018 24772000
Source: State bank of Pakistan
Graphical representation;
We had made a graphical representation of the given data mentioned above. To analyze a
bird eye view of trend in exports. On the X-Axis we have taken the years and on the Y-Axis
we have presented export of the particular years
 X-Axis; years (Independent variable)

 Y-Axis; Exports Data (Dependent variable)
Page | 100
Source: State bank of Pakistan
The graph represents the decreasing trend in 2011-2012, 2014-2015. The duration of
2015-2017 shows approximately stable exports. And afterwards the dramatically increase in
exports is observed during 2017-2018.
INCO terms:
Set of terms clearly defined shipping arrangements to avoid misunderstanding and

simply communication between the seller and the buyer. Inco terms specify points in the
journey at which responsibilities passes from the seller to the buyer. E.g EXW, CIF, CFR,
CPT, CIP.
Page | 101
Cost of Components:
 Cost of goods
 Insurance
 Main carriage
 Loading/unloading
 Pre-carriage/ on-carriage duty
Regulations followed:
For the export purposes the exporter have to follow and need to take assistance from
following documents:
 F.E.R.A 1947 (Chapter#12)

 Foreign Exchange manual 2018
 Export policy order (issued on yearly basis)
 Import/Export control act 1950
Page | 102
MODE OF PAYMENTS
There are four different methods through which an export payment is received.
Following diagram shows the different modes of payments
1. Advance payments;
Cash in advance is the pre-payment method in which payments of items to be exported is

received in advance before the shipment of goods.
Cash in advance method of payment creates a lot of risks factors for importers. However, this
method is inexpensive as it involves direct importer-exporter contact without commercial
bank involvement.
Key importance:
This method is effective only when the importer must be confident of;
 The reliability of the exporter

 The stability of exporter’s country
2. Letter of credit;
It is the guarantee by the buyer’s bank that they will pay for the goods exported, provided
that the exporter will provide the given set of documents in accordance with the clause
specify by L/C and in a timely manner.
It allows the buyers to offer the secure terms of payments to seller as its bank pay the amount
being guarantor. The technical term for letter of credit is called “documentary credit”.
Page | 103
This mode of payment is not in frequent used because of high cost and more documentary
details.
Key importance:
 Promise of payment by issuing bank

 Minimum risk
3. Documentary collection
In this mode of payment goods are shipped and the documents are sent by the seller’s
bank to the buyer’s bank these documents are provided to the buyers only when the buyer
pays. There are two methods of collection of bills.
 Documents against payment D/P
In this case documents are released to the importer only when the payment has been done.
This mode of payment is also named as CAD cash on delivery. This is quiet secured method.
 Documents against acceptance D/A
In this case documents are released to the importer only against the acceptance of draft. This
method is also named as TR Trust Receipt.
Risk is with the exporter. The trust level between exporter and importer is very high for this
mode. D/P can be converted to D/A for this mode exporter must need a credential report for
importer from his bank to check the level of reliability of the importer.
4. Open account
An open account transaction means that the goods are shipped and delivered before
payment is due, usually in 30 to 90 days. This is the most advantageous option to the
Page | 104
importer in cash flow and cost terms but it is consequently the highest risk option for the
exporter.
This method of payment is rare in Pakistan for the exports.
NOTE:
More trade in our country is on D/P and D/A because of easy understanding, feasibility and
relatively time effective.
OVERDUE PROCEDURE BEFORE EORS;

Before the introduction of an efficient system for reporting of overdue cases all the
work is being done manually. Whenever the export is made all the documents starting from
E-form, invoices, insurance documents, bill of lading, shipping documents are recording
manually in the registers. In case of repatriation cases were closed in the records. The
overdue are identified when the accounts were closed at the end of the month. And in the
case of overdue payments, the 1st and 2nd show cause notices were also presented hand on
hand.
Drawbacks
 At that time on average 22,000 entries made manually, and it seems quite difficult if
we think now.
 The work was extremely time consuming
 This method wasn’t cost effective because more HR has to be recruited for the
manual working, and more salaries have to be paid.
 There were the flaws in notice issuance, because we didn’t have the check and
balance system.
REASON FOR INTRODUCING EORS

Page | 105
The main purpose of this system is to Report those exporters who haven’t realized
their money. Since it falls under FEOD, which deals with the foreign exchange reserves so if
the exporter keeps his/her money abroad, the foreign reserves of Pakistan would not increase
resulting in devaluation of PKR currency. In order to bring the money into the system and
through legal channel, an exporter is bound to realize its export value within 180 days.
Realization of export amount will increase the foreign reserves having a positive impact on
the domestic economy. There are additional benefits in terms of collection of tax money, as it
appears in the banking system therefore lesser chances of fraud.
 For time efficiency

 For cost efficiency
 For reducing paper work and manpower
EXPORT OVERDUE REPORTING SYSTEM (EORS):

This division specifically deals with the cases in which an exporter is unable to
realize the value of its exports. In this case, there’s either zero or partial value of an export is
realized whereas an exporter is bound by law to realize the foreign exchange value equal to
the good’s value that are exported. In case of non-realization, the authorized dealer (AD)
must report to the SBP BSC every month.
Important terms:
 V-12
If the exporter is not responding and not submitting shipping documents then
AD will report in V-12.
Page | 106
 V-20
If the exporter doesn’t realize its value of exports then AD are required to
report in this system. Once the data of the exporters is uploaded in V-20,
FEOD (EORS) will access it for the further actions against the exporters
under FERA 1947/SBP.
Page | 107
 V-21
Those exporters who have realized their overdue value after appearing in V-
20 will be listed in V-21. It means that they are clear from any further
allegations.
 DAP-4
Page | 108
In collaboration with the IT department and States department of SBP a portal is

designed known as DAP-4 (data acquisition portal). This is the platform where
the head offices of every commercial bank can upload their data related to their
operations. The data related to export overdue cases is then transferred to EORS
automatically by States department of SBP.
PROCEDURE OF EORS
Reporting of overdue cases
On 15th of every month, the head offices of Authorized dealers (AD) collects data
from their branches located nationwide so that it can report to the SBP BSC by 25th to 30th.
Previously the data was uploaded in the appendices V-16 whereas now it has replaced by
appendices V-20.
Action Taken by FEOD (Export overdue unit)
After receiving the data of non-realized exports, FEOD will launch first system
generated ‘Show cause notice’ in which they will warn the exporter to realized their overdue
bills within 21 days. This notice will be sent on its official address. Furthermore, ADs are
advised to submit a copy of shipping documents in the same time period.
In case the exporter misses out or didn’t receive the first show cause notice, A second
or Final show cause notice is issued which will be sent at the official and residential address
of the exporter/partners/company to inform them to realize their overdue amount within next
21 days before the case is transferred to the FEAD (Foreign Exchange Adjudication
department) for the legal proceedings. For one shipment one show cause notice will be
issued to the exporter.
Page | 109
REFERRING THE CASE TO THE FEAD:

If the AD is unable to provide the documents of the exporter, a complaint will be
launched against the AD and further actions will be taken against the AD under the FEA
court under section 3 (3) of FERA 1947/SBP. The exporter will appear in the Court where all
legal proceedings are take places. If guilty, the exporter will have penalty charged up to 5
times of the export value.
System overview for submission of statement to HOK:
To facilitate the capture of V-20 and V-21 data by banks / bank branches, and its
onward submission to the state bank of Pakistan, the information systems department of SBP
has developed a software application (Export Overdue). This software application replaces
the Excel sheet previously used to submit export overdue data to SBP.
The software has two variations, one for the Bank Head office and the other for their
branches. The branch site software is simply a subset of the Head Office software. This
write-up focuses on covering head office software, as all the options available in branch site
software.
User;
The intended users of Export Overdue System are the users who typically make
regular data entry of V-20 and V-21.
SYSTEM FUNCTIONALITY:
The EORS provides Graphical user interface to its users for performing different
operations on the data it manages. Users manipulate data using these GUI based screens. The
users-interface offered by the Export Overdue Reporting System can be categorized as
following;
 Installation information (setup)

 Transactions
Page | 110
 Disk Preparation and Data uploads
Installation information (setup)
Two screens are provided by the system to establish installation information by

entering the bank and branch data. This data is entered once at the time of installation.
Transactions
There are two transactions (main data entry) screens in the export overdue system
that will be frequently used by the operators. V-20 form options and the V-21 form options
Disk Preparation and data upload screens
This category of screens will be used to load data from branches at the Head Office or
to prepare data for submission to SBP.
Page | 111
Export bill
Export bill
Overdue
Overdue
V-20
V-20
EORS
EORS Report
Report (hard
(hard copy)
copy)
1st
1st Show
Show cause
cause
AD
AD Exporter
Exporter
Realised
Realised Not realised
Not realised
Uploaded
Uploaded in
in V-21
V-21 Final Show
Final Show Cause
Cause
Realised
Realised not Realised
not Realised
Case
Case handed
handed ovr to
ovr to
Uploaded in V-21
Uploaded in V-21 FEAD
FEAD
Page | 112
SIGNIFICANCE OF EORS
 Exploited the flaws of export relating issues of non-recovery of export payments:
Export reporting system exploited the flaws of export relating issues of non-recovery
of export payments. Any kind of over due amount related to export is determined in this
system automatically. Atomization is its unique working point.
 Realization of exports payments:

Focus is on the realization of export payments. Its major function is to focus on the
realization of remittances in a better way .its function is more effective than the past manual
system.
 Helpful in adjudication process:

Export reporting system is helpful in adjudication process. less paper work in
adjudication process .complaints can be made easily .An individual can perform the tasks of
many .compilation of documents is being easier than the past .Results of the working can be
easily attained.
 Efficient working:
It helped in working efficiently.in a given time period work can be done effectively.
Less paper work is an important segment. Atomization is the effective one .It helped in
reducing stationary cost. More work in less time.
An individual is handling export overdue reporting system, reducing work of many

nowadays .All the process is on one click. One man can handle the whole process effectively
and efficiently.
Page | 113
IMPACT OF EORS ON THE ECONOMY

The EORS may not have the direct impact on the economy but rather indirect. Since
its main concern is to realize the export overdue, bringing the foreign currency into Pakistan
will increase foreign reserve. In result, the more supply of the foreign currency in domestic
market/ reserve will lead to a decrease in the value of foreign currency ($) therefore the PKR
value will increase against the US Dollars. Since the EORS makes the system efficient
therefore there will be less lag in the economy and more exports overdue will be realized in
lesser time.
If no such system was present then there would be outflow of PKR leading to
currency depreciation and the money would stay for longer time in the foreign country.
Issuance of show cause notice would be delayed since the system would be manual. Talking
about the balance of trade (BOT), with low PKR value against foreign currency, there will be
trade deficit since the export value will be not as much as in the case it would be if the
realization of export overdue were done through EORS.
SUGGESTIONS
 Export overdue reporting system must be more efficient in working.

Related to cases it should be more efficient in working to complete the proceedings
on time. The operator can perform more work in a shorter time. Overdue cases can be easily
resolved.
 Atomization of intimation
Page | 114
Atomization of intimation is helpful to exporters so that they may be able to oversee

the payments of realized cases. Atomization of intimation means the cases which are nearly
too overdue, should be inform before due date.
 Training of exporters
There should be special training for this system.so that it may be easy for the
operator to operate it in a better way. There should be a proper way to perform the task.
 Improvement of IT section
Improvement of (IT) section is more important because slow processing can afford
in this system. Reason is that, lots of cases are in process and if main system is slow then
there would be difficult to handle many cases. And it would be difficult to give results.
 Instructions for Authorized dealers

 Authorized dealer should obtain credibility report from importer to assure his financial
position, so that a successful transaction can take place.
 Authorized dealer should follow all the instructions and should inform and report SBP
on time so that, SBP could be able to take corrective action on it.
 In case of default heavy penalties should be imposed on Authorized dealer. And it
should be wave off.
 The AD should complete case in all respects meeting the prescribed requirements in
order to avoid return of case under objection.
Automatic issuance of show cause notice by AD’s
 The authorized dealers must have the authority to issue to show cause notices by
themselves to the exporters. They must have a system that automatically reports to
SBP about the issuance or non-issuance of show cause notices.
Page | 115
CONCLUSION
The introduction of EORS has created efficiency in the FEOD department. Previously the
system was manual that required more time and labor force. Now everything has to be uploaded in
the system and computerized notices are issued to the exporters. The file work has decreased
therefore this department looks more organized than ever.
In SBP BSC Lahore division, Nearly 1% of the exports cases are filed in the FEOD system
out of which 30-40% of these cases are realized. For example, in 2017 nearly 10,000 show cause
notices were served to the exports and approx. 3735 overdue were repatriated.
The efficiency in the system also helps in the other procedure such as launching a case
against the exporter. When all the procedure was done manually, it required more time to file a case
in FEAD. Now the case is transferred to FEAD in less time, which means that the efficiency in FEOD
department will affect FEAD department as well.
The Department is still working at a good pace and all the work is done on time, however
some changes are still needed in order to make it more efficient since technology is always changing
therefore, the system should be updated frequently. The problems that are faced in uploading data
should be resolved as it causes a time lag.
Page | 116
PROJECT#2
IMPACT OF SUBSIDIES ON THE EXPORTS
WHAT IS SUBSIDY?
Subsidy is a transfer of money from the government to an entity. It leads to a fall in the price
of the subsidized product. The objective of subsidy is to bolster the welfare of the society.
EXPORT SUBSIDY
Governments also regulate trade by providing various kinds of support for export producers.
Export subsidies come in a variety of forms, but they share the trait in benefitting from
government funds.
Government help to exporters, generally in two forms
(1) Service subsidy: trade information, trade shows, feasibility studies, foreign
representation, etc.
(2) Cash subsidy:
(a) Rebate on imported raw materials and duty-free import of manufacturing

equipment (called indirect cash subsidy)
(b) Drawback as a percentage of the value of exports (called direct cash subsidy).
Although World trade Organization (WTO, formerly GATT) recognizes that subsidies hinder
fair competition and distort trade practices, it has not been able to define precisely what kind
of assistance constitutes a subsidy.
Page | 117
IMPACT OF SUBSIDY ON ECONOMY

Subsidies reduce the price of good for the consumers thereby, several important
commodities are available more cheaply, and this can have positive or negative effects in
itself. In case of basic goods for consumptions such as food, water, electricity, etc. this can
lead to a boost in the average consumption of the consumer and make them better
off. However, a subsidy may also lead to an over exploitation of resources, as seen in the
LPG Subsidy given in India (that's why government is asking people to give it up voluntarily
now, as lot of people are availing the subsidy without needing it), Increases savings for the
individuals (assuming Income remains constant as cost of consumption declines)
Y=C+S (Income= Consumption + Saving)

Also, savings are used as investment (S=I), so an increase in savings could imply an increase
in Investments (if they're put into banks, formal financial institutions) However, an improper
use of subsidies might adversely affect the distribution of income in society, because a
subsidy in effect implies a direct cash transfer from an individual (taxpayer) to another
individual (or set of individuals). So an improper use of subsidies, implying an improper
allocation of government finances can lead to redistribution of income in society, and
therefore must be done judiciously.
Subsidies must also be properly targeted, that is towards the poorest of the poor, because
many a times what happens is that the subsidies reach people who are slightly above or
below the poverty line, but the poorest of the poor are not able to get the benefits of
subsidies.
WORKING OF FEOD DIVISION (UNDER SUBSIDY SUB-DIVISION)

Here, in the department of FEOD, Lahore office number of sub-units is working. That
includes export approvals, import approvals, subsidy claims, export overdue etc. but our
prime focus in this report is the subsidy sub-unit.
In this division the head (ACM) is Maam Arifa and she is supervising the whole activities
conducted under this sub-unit. The details are mentioned bellow that who is handling which
part of the subsidy;
Page | 118
 Maam Ume-Laila is also a senior person of this division and she works on the
amendments of circulars of various schemes and she also work in correspondence
with HOK.
 Maam Rukhsar, she is the working on dairy dispatchment and this is the most critical
and important seat in the whole FEOD division. Because without the allocation of the
dairy no. to every case no one can work on any kind of case.
 Miss Nayab, she is handling the cases of objection related to all schemes of sugar,
wheat, textile and non-textile.
 Miss Nagina and Miss Shumaila both are working on DLTL schemes of textile 2017-
2018. They are handling the cases, from receiving, verification till the processing of
claims.
 Maam Hira is dealing with sugar subsidy claims and Maam Sidra is working on
wheat subsidy claims.
SUBSIDY SCHEMES IN PAKISTAN:

The State Bank of Pakistan has stopped payment of drawback of local taxes and
levies (DLTL) and research and development subsidy (R&DS) claims as the funds allocated
by the Ministry of Finance have been exhausted. The main purpose of the scheme is to
encourage the exports of garments, processed fabrics manufacturing unit and home textiles.
 The drawback shall be available t only manufacturing companies exporting units

 The unit availing drawback shall have to be registered sole proprietor, partnership or
a company and shall be registered with related association, with Directorate of Trade
Organization, Ministry of Commerce.
Detail of Subsidy Schemes (2009 – 2018)

The schemes are giving to those sectors which the government wants to encourage and
the sectors, which have a strong potential and produce the products eligible to be exported.
Page | 119
We can say that some of the sectors are still neglected but it all depends on the government
prevailing in the country and also on the priorities of government.
In Pakistan there are total 14 schemes introduced since 2009, given to various sectors. The
sectors getting benefits of these subsidies since last few years are
Textile
(DLTL)
Sugar
Subsidy Non-
Textile
schemes (DLTL)
Wheat
Textile Subsidy Schemes:

Textile is the pioneer sector to which the subsidies were given 9 years back because
the exports are on major basis. Federal government through Ministry of Finance decided to
provide Drawback of Local Taxes and Levies (DLTL) collected from garments, home textile
and processed fibers exported. This facility was applicable on exports since 01-09-2009.
 DLTL 2009 shipment base

 DLTL 2014-2015 incremental base
 DLTL 2015-2016
 DLTL 2016-2017 shipment base
(Prime Minister’s Package)
Page | 120
 DLTL 2017-2018
Non-Textile Subsidy Schemes

The subsidies are given to this sector on the basis of the value of goods exported, this
sector includes various goods like shoes, leather products, sports goods, surgical instruments,
gloves etc.

 DLTL 2016-2017 shipment base
 DLTL 2017-2018
Wheat Subsidy Schemes

Wheat farmers in Pakistan face many challenges. Like scarcity of water is a big threat for
wheat productivity. And these challenges are discouraging the farmers to work. So,
government is trying to encourage the wheat growth and focusing this sector since last 3
years through comparative subsidy schemes.
 Wheat subsidy 2015

Sugar Subsidy Schemes

Sugar industry is the largest industry of Pakistan after textile. Pakistan is an important
cane producing country and is ranked fifth world cane acreage and 9th in sugar production. So
keeping focus on the position worldwide Pakistan government had focused and encouraged
the exports of sugar in last 3 years by the following schemes.
(Research and development department, The Lahore Chamber of Commerce & Industry)
 Sugar Subsidy 2015
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 Sugar subsidy 2016

 Sugar subsidy 2017
General description of subsidy cases

For the purpose of subsidy claim the process starts from exports part. He has to submit the
documents that include
 Approval letter from respective authority.

 E-form
 Goods declaration form (GD)
 Bill of lading
 Commercial/ custom invoice
 Export proceeds realization certificate
 Realized amount on exports in A1-O1/A2
 All documents duly attested
All these documents are then verified by the respective AD’s of exporters. In case of any
deficiency in the documents the details are referred back to exporters. After the satisfaction
of respective AD’s these documents are forwarded to the FEOD, SBP (BSC) with the
addition of AD undertaking in the behalf of exporter. After reaching the FEOD division of
BSC the documents are cross-verified by the returns sub-division. And this this considered
the most crucial part of the procedure.
Here, the comparison is made between the values that exporter is claiming and the subsidy
calculated on WAR (weighted average rate). Whichever is less that amount is offered as a
subsidy to exporter. If all the details are sufficient in the documents the case is processed
further. Otherwise it is sent back to objection.
Page | 122
Flow Chart:
Exporter
(Submit the docments)
AD (Check the validity of

documents)
FEOD
(Returns Section)
Returns Section
(Cross Checking of Documents)
Case Processed Case sent to Objection
Page | 123
IMPACT OF SUBSIDY ON THE EXPORT OF TEXTILES
Textile Sector:
Textile is the most important manufacturing sector of Pakistan. And has the longest
production chain, with inherent potential for value addition at each stage of processing, from
the cotton ginning, spinning, fabric, dyeing and finishing, made-ups and garments. The
sector contributes nearly 1/4th of industrial value-added, provides employment to 40% of
industrial labor force, and consumes about 40% of banking credit to manufacturing sector
and account for 8% of GDP.
Vision: to become a leading country in field of export of value-added textile products.
Mission: to develop and implement a textile policy, which ensures consistency,

predictability, and transparency in Government across and programs, while building the
reputation of the country as a reliable source of high textile goods.
(Article: Ministry of Textile Industry Government of Pakistan)
Analysis of exports in textile sector

We have taken the data of previous 8years of the exports of textiles in Pakistan for our
analysis. The data is taken form the website of State Bank of Pakistan (Publication Data).
The total value of textile exports includes the data of
 Raw cotton
 Cotton yarn
 Cotton cloths
 Bed wear
 Readymade garments
Page | 124
 Made-up articles etc.

US $)
Table No.2
Financial year Total export in textile

2010-2011 13,788,110
2011-2012 12,336,000
2012-2013 13,047,550
2013-2014 13,720,090
2014-2015 13,540,330
2015-2016 12,756,277
2016-2017 12,456,891
2017-2018 13,343,777
Source: Statebank of Pakistan
We had made a graphical representation of the given data mentioned above. To take a
bird eye view of the trend in textile exports. On the X-Axis we have taken the years and on
the Y-Axis we have presented textile export of the particular years

GRAPH 1.2
Page | 125
export in US million $
14,000,000
13,500,000
13,000,000
12,500,000
12,000,000
11,500,000
2010-2011 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018
export in US million $
Reasons for the fluctuation in Export of Textile
 Pakistan’s growth of textile and clothing exports declined by 10 per cent from the
year 2011 to 2017
 Pakistan had lost the competitiveness due to the regionally non-competitive energy
cost, gas to the textile industry in Bangladesh was being provided at a cost of $3
per mmbtu, in Vietnam at $4.2 and in India at $4.5.But in Pakistan the product is
being supplied at a cost of $11 per mmbtu,
 In 2010 and 2011, average world cotton prices were high, around $1.05 per pound
and $1.55 per pound, respectively, compared with $0.63 per pound in 2009.
 In 2012, world average cotton prices came down to $0.89 per pound before
marginally rising to $0.90 in 2013. In 2012-13, total exports increased to $24.46
billion by 3.56%, while textiles and clothing exports registered 5.62% growth to
reach $13.15 billion.
 In 2017, however, cotton prices surged to $0.86 per pound, which mainly accounts
for the 7.70% growth in textiles.
Page | 126
Detail of Schemes:
The ministry of textile was created in 2004, amalgamating all textiles related functions of
the Ministry of Commerce, National Food security and research (MINFAL), and industries
and production. The schemes were first introduced by this sector and at that time certain
goals, formulation of goals were to be achieved during 2014-2019.
Goals:
 To double value-addition from $1billion per million bales to $2billion per million
bales in five years.
 To double textile exported from $13 billion per annum to $26 billion per annum in
five years.
 To facilitate additional investment of $5 billion in machinery and technology.
 To improve fibers mix in favor of non-cotton 14%-30%
 To improve product mix specially in the garment sector from 28%-45%
 To strengthen existing textile firms and establish new once
 SME sector will be main focus of attention to enhance growth in value-added
products through support and incentive schemes.
 Schemes and initiatives will be launched for increasing usage of ICT
 Facilitate the creation of 3 million new jobs
Page | 127
Subsidies:
These subsidies are given on the annual 10% increment in exports of the base year.
Table No 3
Textile categories and subsidies provided
Years Processed fibers Made-ups Garments

DLTL 2015-2016 1% 2% 4%
DLTL 2016-2017 5% 6% 7%
DLTL 2017-2018 5% 6% 7%
Procedure for Lodgment of Claims under DLTL (Textile sector)
Roles and responsibilities of exporter regarding claim
 First of all claim will be lodged by the eligible exporter with the Authorized dealer
(AD) for eligible product against which the repatriation of foreign exchange have
made.
 Then claimant will obtain certificate from the relevant authorities of Textile, Sugar
and wheat.
 Application by the exporter will be signed and stamped by the officer of claimant
who are authorized to deal with the accounts of claimant with the AD. Afterward AD
verifies the signatures.
Steps taken by the Authorized dealer
 Banks are required to properly examine the claim prior to the submission to EFOD.
 The claim will be served by the AD on FIFO basis .The claim that found any
discrepancy will be rectified by the claimant and will be considered in processing
queue as per the date of rectification. AD’s will proceed those claims on which the
Page | 128
proceeds have realized. Claim letter will also signed by regional Compliance /
internal audit head
 Each bank has its central hub, which provides the details of at least two contact
people who will communicate SBP BCS office for the purpose of drawback. Claim
lodge in consolidation form under covering letter within two weeks of submission to
AD. If SBP BCS examine any flaw in the claim, two weeks period will be given to
AD for rectification.
 In order to facilitate exporter on equitable basic and manage the claim will be
submitted to ADs in phase manner.
 Besides the hard copies the bank will also submit soft copy on email listed against
each SBP BCS.
 The consolidation claim will not include any individual discrepant claim and such
claim of along exporter whose RDA cell registration is not valid or provisionally
registered as on the date of submission of claim with the AD.
 AD’s will maintain the record along with the complete claim at central hub for
verification by SBP.
Payment Mechanism
 The particulars of claims which are found in order for payment by the bank will be
sent to SBP BCS office by the central hub as a If required SBP BCS may differ the
payment of a consolidation claim as per format and email.
 If required, SBP BCS may defer the payment of a consolidation claim or any one or
more individual claim in the consolidated claim and require submission of relevant
documents
 Amount of claim found in order by SBP BSC will be credited to account of
concerned bank for onward credit to claimants within 24 hours
Documents required
 SBP approval letter

 E-form
Page | 129
 Goods Declaration form

 Bill of Lading/Truck receipt/ railway
 Exports proceeds realization certificate
 Realized amount is reported in A1-01-A2
 AD undertaking on the behalf of export
Do subsidies have positive impact on the export of processed Fiber, Made-ups &
Garment or not?
We had made a graphical representation of the given data mentioned in annexures. To

take a bird eye view of the trend in textile exports in various categories. On the X-Axis we
have taken the years and on the Y-Axis we have presented textile export in processed fiber,
made-ups, garments of the particular years

GRAPH 1.3
Exports of Textile (In USD)

4,000,000
3,500,000
3,000,000
2,500,000 Processed Fabric

Made Ups
2,000,000 Garments
1,500,000
1,000,000
500,000
0
2015-16 2016-17 2017-18
Page | 130
As according to our analysis of the exports (previous 3 years) of selected HS codes

of processed fiber, made- up & garments, the trend of the impact of subsidies varies
in all categories.
Instead of increasing subsidy rate from 2016 onward the relevant impact of exports in
processed fiber not seen. As on common perception this trends shows negative
impact of subsidy on both processed fiber & made-up due to the following
assumption in this sector:
 Decline in international prices of cotton & its product.
 Gas facility had been provided on high prices to production unit relevant to
the competitive countries.
 Instable political conditions in Pakistan.
 Continuously relying on the old production method & machinery
 Lack of technical skills in labor forces
So all these factors have a very intense impact on our export but due to subsidies
provided in textile sector has minimize the effect on this worse economic factor.
Fashion industry in Pakistan has a great reputation in international market. People
living in other countries like the fashion garments & clothing brands of Pakistan. Due
to the higher repute of Pakistan fashion industry the demand for the made-up
garments increase in the previous year & have a positive impact on GDP.
Issues of textile sector

Some issues that we can identify that due to which the exports are still not at that level
where it should be, the details are mentioned below
 Product diversification
Pakistan export very limited range of goods, efforts would have to be made to widen the
production line like, children wear, beachwear, and leisure wear, technical textiles, geo
Page | 131
textiles and medical textiles. Government will have to establish product development and
innovation Fund to develop new products so that textile sector will be enhanced and
encouraged.
 Technology Up-gradation
This is also an issue, which has been addressed so far. And a scheme is introduced to
improve overall technology configuration of the sector, remove critical imbalances in the
value chain and achieve compliance with international standards.
 Neglected sectors
Government will establish state of the art Product development Centre with machinery,
equipment and training facilities for vulnerable sub-sectors such as carpets and handlooms.
Ministry also has to focus on fiber development centers for silk, wool, jute, linen, bamboo
and other natural fibers.
 Electricity and gas issues

Due to load shedding of electricity and gas the textile sectors suffers a lot, in terms of their
production. Ministries have to take measure to give priority to textile sector for availability
of energy. So the production will be encouraged to enhance exports.
 Communication gap
There exists the communication gap sometimes between AD and exports due to that
exports are unaware of the facilities and incentives given to them by the government. Due, to
that reason the exporters remain de-motivated and are unable to perform to their level best.s
 Lack of training
Due to the lack of training the work force is unable to adopt and operate the new method
of production. They are unable to cope up with the new challenge that is also a key reason to
lowering the productivity of textile fibers. They have to be trained to make them competent
to perform efficiently.
Page | 132
IMPACT OF SUBSIDY ON THE EXPORT OF SUGAR

Sugar sector
Sugar industry in Pakistan is the 2nd largest agro based industry after textile. Pakistan is
an important cane producing country and is ranked 5th in the world cane acreage and 9th in
sugar production. The share of sugar industry in value added of agricultural and GDP is 3.2%
and 0.7%, respectively.
The critical success factors are as follow
 The production of the sugar is highly dependent on the cultivation of sugarcane. If the
yield from sugarcane is low than the unit cost of production increases for sugar
manufacturing unit and directly impacts their profitability.
 The government of Pakistan policies are also critical for the success of this sector if
the policies are supportive then the investors are attractive to the industry, opposite to
that unsupportive and restrictive Govt. policies can turned the investor away from
sugar industry.
 Success of the sugar industry in Pakistan also depends upon the local and
international supply/ demand scenario. The industry should be strong at supply sides
so that it can fulfill all the demand.
Page | 133
Analysis of sugar exports

We have taken the data of previous 4years of the exports of sugar in Pakistan for our
US $)
Table No 4
Financial year Sugar export (thousand

US $)
2014-2015 283595
2015-2016 110069
2016-2017 198295
2017-2018 663464
We had made a graphical representation of the given data mentioned above. To take a bird
eye view of the trend in exports. On the X-Axis we have taken the years and on the Y-Axis
we have presented export of the particular years

Page | 134
GRAPH 1.4
exports in sugar (thousand US $)

700000
600000
500000
400000
300000
200000
100000
0
2014-2015 2015-2016 2016-2017 2017-2018
exports in sugar (thousand US $)
The graph represents the dramatic increase in the exports of sugar. This increase refers to the
introduction of sugar subsidy scheme in 2015-2016 for the very first time and it has
encouraged the investor, farmers and exports as a whole. Moreover, we can say that the
production is also increased because in addition to fulfillment of the local needs of sugar we
are exporting at a large scale as well.
 Sugar subsidies
In this subsidies are given on the quantity of sugar export. At first quantity for sugar
export are approved by the SBP. During the year 2015-16, the subsidy rate was PKR 10/kg.
50% of the subsidy is provincial and Federal gives 50% of the subsidy. As mentioned in the
circular “Shipments made after 45 days of SBP approval or after May 15, 2015 will not be
eligible for subsidy. Sugar exported to Afghanistan on price less than USD 450 per MT will
not be eligible for subsidy.” (Sbp, 2015)
During the year 2016-17, the rate of subsidy rose from PKR 10/kg to PKR 13/kg.
Another amendment made in the claim procedure was that, Sugar exported to Central Asia
that has value less than USD 450/MT would not be eligible for subsidy anymore. However,
Page | 135
in previous year it only included Afghanistan. The subsidy for 2017-18 is not announced but
the last year scheme is still on going.
Sugar quota allocation
The periodically production quantity of sugar is subdivided on the basis of local demand of
the country. According to the population of Pakistan (data obtained from census) an
estimated quantity is set aside for consumption purpose and the surplus quantity of sugar is
approved for export purpose by the Ministry of commerce, as stated below in a chart along
with the date & circular letter no. Notify by the ministry to SBP (BSC).
Furthermore, each sugar mill individually approved the quantity of sugar for export purpose,
as per production & demand
TABLE No 5
EPD circular letter no. Date Fresh sugar quota (MT)

20 11-09-2017 500,000
17 11-07-2017 300,000
10 07-04-2017 200,000
1 19-01-2017 225,000
20 28-12-2015 500,000
Procedure for Lodgment of Claims under DLTL (Sugar sector)

AD will forward the request of sugar mills through their respective department to the
FEOD, SBP-BCS, and head office Karachi along with the following documents
 Clearance certificate issued by the concerned Cane Commissioner with the

details that they have cleared all the outstanding dues of the farmer.
 Sugar export contract
Page | 136
 Manual Form-E
 Irrevocable L/C OR advance payment voucher
 FEOD allocate sugar quota on FIFO basis. After the approval of quantity exporter
must ship the sugar wit in 60 days.
 Freight support will be given on a sliding scale between the international price of
US$376/KG and $499/MT. Once the price reaches at the$499/MT level of
international market.
 SBP calculate subsidy rates on daily basis.
 AD will forward the shipment wise request to SPB for claiming freight support quota
along with necessary documents.
 Claim is made within 60 days of realization of export proceeds or date of shipment
whichever comes later.
Analysis:
Cases of Sugar subsidy claims (TABLE No 6)
Years Cases processed

2016-2017 654
2017-2018 1309
Page | 137
GRAPH 1.5
Sugar Subsidy Claims
1400
1200
1000
800
600
400
200
0
2016-2017 2017-2018
Sugar Subsidy Claims
Source: SBP (BSC) FEOD, Lahore
The table 1.3 shows the total number of cases processed in the FEOD Lahore.
During the year 2016-17, there were 654 cases were filed for sugar subsidy grant.
The number of cases rose to 1309 by the year 2017-2018. We see a sharp increase in
the number of cases for subsidy claims. Therefore, an increasing trend will indicate
us that more exports are done in the current year than the previous year. For our
further analysis, we can see the amount paid for subsidy against the cases in the
Lahore division. Since the total amount of exports is not available
Amount paid for subsidies (TABLE No 7)
Years Amount paid (PKR)

2016-2017 2,274,118,600
2017-2018 2,811,686,342
We have taken this data from internal source and this gives an eye view of the total amount
of subsidies paid by the FEOD, Lahore office. From this data we have observed that increase
in amount of subsidies which leads to the increase in exports along with the increase in the
number of claim cases.
Page | 138
GRAPH 1.6
Sugar Subsidy paid
3,000,000,000
2,500,000,000
2,000,000,000
1,500,000,000
1,000,000,000
500,000,000
0
2016-2017 2017-2018
Source: SBP (BSC) FEOD, Lahore
Key issues of Sugar sector

 Sugarcane is a kharif crop, the crop performance is dependent upon the irrigation
water timings, in the absence of adequate water the tube wells are used that run on
diesel and makes sugar industry uncompetitive.
 Sugar mills in high and low recovery areas pays the same price for sugarcane. This
makes it difficult for low recovery areas to compete with high recovery areas.
 Transportation is an essential issue in sugarcane-distribution chain. There is no proper
road network near sugar mills; it requires a huge transportation cost to transfer the
cane from fields to the mills.
 Per hectare growth of sugarcane is low in Pakistan regionally and globally.
According to the experts the shortage of water, low quality fertilizers, less competent
seeds, lack of proper spraying of insecticides and pesticides and lack of additional
training of farmers, are the core reasons of low productivity.
Page | 139
IMPACT OF SUBSIDIES ON EXPORT OF WHEAT
 Wheat sector
There are two main crop-growing seasons in Pakistan. The winter crops (Rabi meaning
spring) are sown during October-December and are harvested during March-April. The
sowing season of summer crops (Kharif meaning autumn) is generally longer. It starts in
February for sugarcane, March-May for cotton, June-July for rice and July-August for maize
crop. The harvesting of these crops starts in September and continues up to December with
exception of sugarcane that can proceed up to March or even beyond. The planting of
orchards and other trees is carried out in spring (February-March) or during monsoon (July-
August). The wheat, cotton, rice, sugarcane and maize occupy the main cropped land and are
categorized as major crops. The remaining crops are categorized as minor crops, because
these are grown on smaller areas. Here is the crop calendar.
Pakistan, the most agricultural province is Punjab where wheat and cotton are the most
grown. Mango orchards are mostly found in Sindh and Punjab provinces that make Pakistan
the world's 4th largest producer of mangoes.
Export Analysis of wheat
We have taken the data of previous 4years of the exports of wheat in Pakistan for our
Page | 140
US $)
Table No 8
Financial year Wheat export (000$US)
2014-2015 206
2015-2016 369
2016-2017 2,937
2017-2018 114,627
We had made a graphical representation of the given data mentioned above. To take a
bird eye view of the trend in exports. On the X-Axis we have taken the years and on the Y-
Axis we have presented export of the particular years

Page | 141
GRAPH 1.7
Export in wheat( thousand US $)

140000
120000
100000
Export in wheat( thousand US

80000 $)
Axis Title
60000
40000
20000
0
2014-2015 2015-2016 2016-2017 2017-2018
The graph represents the dramatic increase in the exports of wheat. This increase refers to
the introduction of wheat subsidy scheme in 2015-2016 for the very first time and it has
encouraged the investor, farmers and exports as a whole. Moreover, we can say that the
production is also increased because in addition to fulfillment of the local needs of wheat we
are exporting at a large scale as well.
 Subsidy schemes
There are different rates of subsidies in Punjab and Sindh. The method of
calculating wheat subsidy also differs from the Sugar or Textile.
Formula= Wheat value in MT x Rate decided by the Provincial &
Federal government x current USD against PKR
The rate decided by the Punjab government was 55. Whereas in Sindh the rate
decided by Sindh government was around 45. During the 2015-16, In Punjab on
export of 100/MT, a person can claim around PKR 570,000.
Page | 142
The formula remained the same in 2016-17, whereas, the rate was increased
by 15 points in each of the province. The new rate in Punjab was 70 and In Sindh it
was 60. This scheme is still continued in 2017-18 at the same rate.
Procedure of the lodgment of claim (wheat)
Accordingly, ADs are advised to process the cases of eligible exporters for subsidy claims
against export of wheat and wheat products as per following mechanism/conditions:
 ADs will forward the shipment-wise requests of wheat exporters on prescribed format
through their Departmental to Foreign Exchange Operations Department (FEOD),
SBP-Banking Services Corporation (BSC) along with the attested / authenticated
copies of the following documents
 Letter from Food Department of respective Provincial Government confirming
procurement of specific quantity of wheat/wheat products by the exporter in terms of
MNFSR’s Notification
 Manual Form-E/Electronic Form-E (EFE).
 Goods Declaration (GD) Form.
 Bill of Lading/ Truck Receipt/ Railway Receipt. In case export has been done through
House Bill of Lading, relevant Master Bill of Lading must accompany it.
 Commercial / Customs Invoice.
 Export Proceeds Realization Certificate / Advance Payment Voucher properly
showing utilization.
 Subsidy will be allowed only after full realization of export proceeds against Form-
E/EFE.
 Exporters of wheat/wheat products will approach (FEOD) SBP-BSC, through their
AD claiming the subsidy latest by May 15, 2017. No claims will be entertained after
aforementioned time period.
The SBP-BSC will scrutinize the claims and discrepant claims will be returned by SBP-BSC
to respective AD. The same must be resubmitted to SBP-BSC after removing all the
discrepancies within 40 days of return, after which no such application will be entertained. f)
Page | 143
Approved claim will be disbursed to respective AD in its account maintained with SBP-BSC
for onward credit to the exporter’s account within 24 hours of disbursement.
Rate of exchange applicable for calculation of PKR subsidy will be the Buying Rate of
Weighted Average Customer Exchange Rates issued by Domestic Markets and Monetary
Management Department of SBP on the date of final realization of export proceeds against
E-Form. This rate is available at SBP Website
Cases of Wheat subsidy claims:
Table No 9
Years Cases processed

2016-2017 297
2017-2018 368
GRAPH 1.8
Wheat subsidy Claims
400
350
300
250
200
150
100
50
0
2016-2017 2017-2018
Wheat subsidy Claims
The table 1.8 shows the total number of cases processed in the FEOD Lahore.
During the year 2016-17, there were 297 cases were filed for wheat subsidy grant.
Page | 144
The number of cases rose to 368 by the year 2017-2018. We see a slight increase in
the number of cases for subsidy claims. Therefore, an increasing trend will indicate
us that more exports are done in the current year than the previous year. For our
further analysis, we can see the amount paid for subsidy against the cases in the
Lahore division. Since the total amount of exports is not available.
Amount paid for wheat subsidies:
TABLE No 10
Years Amount paid

2016-2017 169,751,341
2017-2018 183,068,410
GRAPH 1.9
Amount Paid for Wheat Subsidies
185,000,000
180,000,000
175,000,000
170,000,000
165,000,000
160,000,000
2016-2017 2017-2018
Amount Paid for Wheat Subsidies
We have taken this data from internal source and this gives an eye view of the total amount
of subsidies paid by the FEOD, Lahore office. From this data we have observed that increase
in amount of subsidies which leads to the increase in exports along with the increase in the
number of claim cases.
Page | 145
Key issues of Wheat Sector

 Over last 60 years since independence of Pakistan the policy makers have not
been able to develop a satisfactory policy for basic necessity of its people,
food.
 Every new government experiments with the new policy at the expense of
people, and there is no consistency at all. At times we have surplus wheat that
rots away in open storages.
 Storage capacity is less as compared to the production that’s why the excess
wheat is smuggled to Afghanistan and India, because of no wheat industry in
Afghanistan and high population in India.
SUGGESTIONS TO ENCOURAGE EXPORTS

In order to boost exports we must support our industries so that they increase the
production. Since Pakistan has vast agricultural land, therefore government should give
incentives to the farmers to grow a specific crop that contributes more in export. For example
Cotton, Wheat and Sugarcane, Rice. If the farmer is encouraged to produce these crops, there
will be excess raw material available for the factories to produce goods and services.
Since the FEOD is responsible for giving payments to the exports therefore, the paper
work should be reduced in order to clear more cases in less time. The government should
focus those industries, which have the potential to export goods. For example, there’s no
subsidy given on exporting of rice, or no subsidy is given on any other fruits. Previously,
meat subsidy was introduced but it has ended.
The SME’s (Small and medium sized enterprises) must be given chance to flourish as
there is enough potential for them to grow. They can provide goods and services in the
domestic market whereas other LSM (Large scale manufacturing) can export its products
abroad since they have an advantage of Economies of Scale.
Page | 146
CONCLUSION
Exports play a significant role in the economy as it more exports will increase the GDP
growth. It means that people of Pakistan will have an increase GDP per capita and less
unemployment.
Some of the procedural changes must be done in order to increase exports. For example
manual sugar and wheat documents must be converted into printed form. We experienced that AD’s
do not check the subsidy documents properly therefore, the FEOD faces difficulties as all the
documents needs to be rechecked by the employee. There should a rule for AD’s that they will be
charged penalty if the documents are incomplete or appeared twice.
Unfortunately the data of exports and exports subsidies was not available in a single file, as
records were not kept organized. More file work was present and multiple excel sheets were made
instead of one. The accumulation of subsidies cases over the years was another issue as many of the
cases of 2015 are still pending.
The government must allocate a certain budget and should make sure that all the payments
are done by the end of the year. This will decrease the workload of the FEOD, as it will clear all the
payments within time. It’s also an incentive for the exporter, as they will be assured that they receive
the amount within a specific time period.
Page | 147
PART SEVEN
Page | 148
CONCLUSION
State Bank of Pakistan is a unique financial institution in Pakistan as it is central bank of our
country as well as a regulatory authority. One of the fundamental responsibilities of the State
Bank is regulation and supervision of the financial system to ensure its soundness and
stability as well as to protect the interests of depositors. The rapid advancement in
information technology, together with growing complexities of modern banking operations,
has made the supervisory role more difficult and challenging. The institutional complexity is
increasing, technical sophistication is improving and technical base of banking activities is
expanding. All this requires the State Bank for endeavoring hard to keep pace with the fast-
changing financial landscape of the country. Accordingly, the out dated inspection
techniques have been replaced with the new ones to have better inspection and supervision of
the financial institutions. The banking activities are now being monitored through a system
of ‘off-site ‘surveillance and ‘on-site’ inspection and supervision. Off-site surveillance is
conducted by the State Bank through regular checking of various returns regularly received
from the different banks. On other hand, on-site inspection is undertaken by the State Bank
in the premises of the concerned banks when required. To deepen and broaden financial
markets as also to diversify the sources of credit, a number of non-bank financial institutions
(NBFIs) were allowed to increase substantially. The State Bank has also been charged with
the responsibilities of regulating and supervising of such institutions. Moreover, in order to
safeguard the interest of ultimate users of the financial services, and to ensure the viability of
institutions providing these services, the State Bank has issued a comprehensive set of
Prudential Regulations (for commercial banks) and Rules of Business (for NBFIs).The
"Prudential Regulations" for banks, besides providing for credit and risk exposure limits,
prescribe guide lines relating to classification of short-term and long-term loan facilities, set
criteria for management, prohibit criminal use of banking channels for the purpose of money
laundering and other unlawful activities, lay down rules for the payment of dividends, direct
banks to refrain from window dressing and prohibit them to extend fresh loan to defaulters of
old loans. The existing format of balance sheet and profit-and-loss account has been changed
to conform to international standards, ensuring adequate transparency of operations. Revised
capital requirements, envisaging minimum paid up capital of Rs.500 million have been
Page | 149
enforced. Effective December, 1997, every bank was required to maintain capital and
unencumbered general reserves equivalent to 8per cent of its risk weighted assets.
The "Rules of Business" for NBFIs became effective since the day NBFIs came under State
Bank’s jurisdiction. As from January, 1997, modarbas and leasing companies, which are also
specialized type of NBFIs, are being supervised by the Securities and Exchange Commission
(SECP), rather than the State Bank of Pakistan.
RECOMMENDATIONS
State Bank of Pakistan is performing well as all of its operations are well planned, organized
and foolproof. However the micro finance activities are not still satisfactory and need
improvements. Followings are suggestion to enhance the performance of State Bank of
Pakistan.
 At the very highest level, the decision-making AUTHORITY for the investment of
reserves should be clearly defined. This hierarchy would normally be established by
the Governor or Board of Directors and would include the overall objectives of
reserves management.
 Senior management needs to specify a strategic long-term portfolio that represents
the best available trade-off between the different risks that there serve management
entity is facing.
 There should be latitude for fund managers to deviate from benchmark in foreign
placements as provided by the RBA and BCRP (Peru).
 If SBP don’t want to do so then it can transfer the authority to the treasurer to assign
extra limit to their fund managers if they can provide the solid reason to invest so
they can invest in the best interest.
 The benchmarks should not short-term market expectations, but their appropriateness
should be reviewed regularly.
Page | 150
 Investment benchmarks are an important tool for assessing performance and

accountability. Where managers should be permitted to deviate from the benchmark
portfolio, performance and accountability will occur through the comparison of
performance of the actual portfolio and benchmark.
 Reserve management authorities should also subdivide their reserves portfolio into
"tranches" according to liquidity and investment objectives and policy requirements.
 The risk management framework should apply the same principles and measures to
externally managed funds as it does to those managed internally.
 Sound risk management of externally managed funds begins with the careful
selection of reputable external managers, which is the task of middle office.
 It is necessary to establish a separate unit, or assign a position within the middle
office, to enable the reserve management entity to fully monitor the activities of the
external manager.
 Risk exposures should be monitored continuously to determine whether exposures
have been extended beyond acceptable limits. Monitoring is essential in identifying
and limiting any cumulative losses associated with either deviation from the
benchmark.
 Reserve managers should be aware of potential financial losses and other
consequences of the risk exposures they should be prepare to accept.
 Risk mitigation could involve the use of standardized documentation and the
performance of periodic reviews of documentation.
 The eligibility criteria for the selection of trading counterparties should be clearly
defined
 There should be a framework for determining the maximum credit exposures
permitted with each counter party.
 Active risk management is good approach to mitigate the risk than passive risk
management practices.
 Use of e-CIB and its extension to cover data about micro finance borrowers of all
MFIs should be allowed.
 Allocation of funds for credit lines in commercial banks for MFIs
Page | 151
 The most effective way of delivering institutional support is to focus on selected

sectors with growth potential and make it time-limited.
Page | 152
ANNEXURE :
Group photo:
Page | 153

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STATE BANK OF PAKISTAN (BSC), LAHORE

Functions of the Department:-.................................................................................................................................. 25

 Islamic Banking Department................................................................................................................................ 35

Balance sheet Horizontal Analysis............................................................................................................................ 78

Export Subsidy.......................................................................................................................................................... 114

SUBSIDIARIES OF STATE BANK OF PAKISTAN

 National Institute of Banking and Finance (NIBAF)

 NATIONAL INSTITUTE OF BANKING AND FINANCE (NIBAF)

NIBAF is located in Islamabad with an office in Karachi.

 State bank officers training scheme

 DEPOSIT PROTECTION CORPORATION (DPC)

 PAKISTAN SECURITY PRINTING CORPORATION (PSPC)

 STATE OF PAKISTAN BANKING SERVICE CORPORATION

DEPARTMENTS OF STATE BANK OF PAKISTAN

1. Agricultural Credit & Microfinance Department

 AGRICULTURAL CREDIT & MICROFINANCE DEPARTMENT

 BANKING INSPECTION DEPARTMENT (BID)

Banking Inspection Department (BID) is one of the core departments at SBP.

 BANKING POLICY AND REGULATIONS DEPARTMENT

BANKING REGULATION DIVISION

 BANKING SURVEILLANCE DEPARTMENT

MAIN OBJECTIVES/KEY RESULT AREAS:

 To ensure effective regulatory and supervisory oversight of Banks and DFIs.

 Credit Information Bureau (CIB)

 CONSUMER PROTECTION DEPARTMENT

1. To promote culture of social responsibility in banks/DFIs/MFBs for amicable resolution

NATURE OF COMPLAINTS HANDLES BY CONSUMER PROTECTION DEPARTMENT

1. ATM/Debit cards issue

 DOMESTIC MARKET & MONETARY MANAGEMENT

 Monitoring of Money and FX market activities

 EXCHANGE POLICY DEPARTMENT

FUNCTIONS OF THE DEPARTMENT:-

1. Maintenance of books of accounts and preparation of financial statements of the Bank in

FUNCTIONS PERFORMED BY DIVISIONS

FINANCIAL ACCOUNTS DIVISION (FAD)

SYSTEMS AND PROCEDURE DIVISION (SPD)

1. Representation of Finance Department, SBP, in various automation projects under

PAYMENT CONTROLLER DIVISION (PCD)

This Division is responsible for:

1. Making of payments to external suppliers and employees of the Bank after

ASSET MANAGEMENT DIVISION (AMD)

Assets Management division is responsible for:

CURRENCY MANAGEMENT DIVISION (CMD)

Currency Management Division is responsible for:

SUPPORT SERVICES DIVISION

Support Services Division performs the function as follow:

1. To deal with various administrative matters arising in the Finance Department

 LEGAL SERVICES DEPARTMENT

1. Corporate Services Division

 HUMAN RESOURCE DEPARTMENT

FUNCTIONS OF REGULATIONS AND COMPLIANCE DIVISION

1. Disciplinary & Litigation Unit: Handles employee discipline, initiates disciplinary

6. Admn & Co-Ordination Unit: Management of Imprest Account and distribution of

 INFORMATION SYSTEMS & TECHNOLOGY DEPARTMENT

1. Run and maintain information systems and technology infrastructure

 INFRASTRUCTURE, HOUSING & SME FINANCE DEPARTMENT

1. To work for improvements in Regulatory framework in the areas of infrastructure,

10. Promotion and Development of infrastructure, housing and SME finance.

 INTERNAL AUDIT & COMPLIANCE DEPARTMENT

FUNCTIONS INTERNAL AUDIT & COMPLIANCE DEPARTMENT

 Financial & Operational Audit Division

FINANCIAL & OPERATIONAL AUDIT DIVISION

This division is responsible to conduct examination of automation of various working areas of