Internship Report 

on SBP BSC Muzaffarabad

SBPBSC SUMMER INTERNSHIP PROGRAM 2019

By
Tayyeba Gul
D/O
Guldad Khan Abbasi

Department of Business Administration

Women University of Bagh AJK

Dedication:

To my mother

A strong and gentle soul who taught me to trust in Allah, believe in

hard work and that so much could be done with little.

1
To My father

For earning an honest living for us and for supporting and encouraging
me to believe in myself.

To my family

The reason of what I become today. Thanks for your great support
and continuous care.

You have been my inspiration. I am really grateful to all of you.

To Teachers
Iowe mygreatestthankstomyteacherswhoconstantly provided
valuableprofessional knowledge and insights,guided mewith time, patience
and encouragement.

To Friends
Ialsowouldliketothanktomyfriends,whohave been warm support forall
thetime.

2
Acknowledgement:-

First and foremost, all thanks to Almighty ALLAH who has empowered my poured knowledge
that made usable to complete this report and made it possible. I would like to thanks
management of SBP BSC (Bank) Muzaffarabad to appoint me as internee and giving me the
opportunity to get the practical exposure of banking sector.

I wish to express sincere gratitude to Mr. Asad Akhunzada our internship program coordinator,
his willingness to motivate us and contributed tremendously to our internship program. I would
also like to express enormous gratitude to our respectable teacher and internship report
supervisor Mr. Asad Akhunzada for providing the direction for this project and helping me in
refining my effort and ideas. Besides, I would like to thankful the supervisors and mentors of the
state bank units, whose great effort and kind teachings gave us the opportunity to take part
and learn about the operations of those units working actively in the bank. I have also pay tribute
to my parents and teachers whose invaluable prays salutary admire and embodying attitude kept
my spirit alive to strive for knowledge and integrity which enables us to reach mile stone.

3
 Table of Contents
Executive summary:........................................................................................................................5

CHAPTER: 01.................................................................................................................................6

INTRODUCTION...........................................................................................................................6

1.1 Background:......................................................................................................................6
1.2 Objective:..........................................................................................................................6
1.3 Vision of State Bank of Pakistan:......................................................................................6
1.4 Mission of State Bank of Pakistan:....................................................................................6
1.5 Aims of the study:.............................................................................................................7
1.6 Scope of the study:...........................................................................................................7
1.7 Data and Methodology:....................................................................................................7
CHAPTER: 02.................................................................................................................................8

OVERVIEW OF STATE BANK OF PAKISATAN......................................................................8

2.1 History of State Bank of Pakistan:.....................................................................................8

2.2 Functions of SBP:...............................................................................................................9
2.3 Banking:.............................................................................................................................9
2.4 Facilities:..........................................................................................................................10
CHAPTER: 03...............................................................................................................................11

STATE BANK & SUBSIDIARIES..............................................................................................11

3.1 NIBAF (National institute of banking and finance):........................................................11

3.2 Deposit Protection Corporation (DPC)............................................................................11
3.3 Pakistan Securities Printing Corporation:.......................................................................12
3.4 SBP Banking Services Corporation (SBP BSC):.................................................................12
3.4.1 Vision of SBP BSC:...........................................................................................................13
3.4.2 Mission of SBP BSC:........................................................................................................13
3.4.3 Hierarchy of SBP-BSC......................................................................................................13
3.4.4 Field Offices:...................................................................................................................14

4
CHAPTER: 04...............................................................................................................................15

SBP BSC Muzaffarabad:...............................................................................................................15

4.1 Departments or Units of SBP-BSC:..................................................................................15

4.1.1 Prize Bond Unit:...........................................................................................................15
4.1.2 Deposit Account Unit (DAU):.......................................................................................20
4.1.3 Public Accounts Unit:..................................................................................................21
Payment section......................................................................................................................24
Receipts Section:....................................................................................................................24
Clearing House:.....................................................................................................................24
Receipts Section:....................................................................................................................24
4.1.4 General Services Unit:.................................................................................................25
4.1.5 Staff Matters Unit (SMU).............................................................................................25
4.1.6 Access to Finance unit:................................................................................................26
4.1.7 Currency Management Unit........................................................................................26
4.1.8 Treasury (Cash) Unit:...................................................................................................30
4.1.9 Vaults:..........................................................................................................................31
4.1.10 Counters:....................................................................................................................32
CHAPTER: 05...............................................................................................................................33

CONCLUSION..............................................................................................................................33

RECOMMENDATIONS...............................................................................................................34

References......................................................................................................................................35

5
Executive summary:
This report is about the SBP-BSC Muzaffarabad where I have done the internship
of six weeks. As we all know that state bank is the central bank of Pakistan and it controls all the
commercial banks which operate in Pakistan. It is a monetary body. It monitors all the
commercial banks and maintains and manages the money supply in the country. The State Bank
BSC is very good opportunity for students to get knowledge and know how about the function
and units of SBP BSC Muzaffarabad. I have done the orientation of all the Units which are
providing services in six weeks. Then I made my internship report.

State Bank of Pakistan is the Banker's Bank and it is also the Bank of Government. It provides
all facilities to general public which it can to help or facilitate them.There is a large no of Units
in this bank and each Unit perform separate actions for daily financial matters that’s why one can
learn a large number of things in this bank. We were rotated in several Units of SBP-BSC. These
Units are Public Account Unit, Deposit Account Unit, Currency Management Unit, Prize Bond
Unit, and General Services Unit, Currency Account unit, Staff Monitoring unit and Access
Finance Unit. I havediscussed each of theunit in detail in this report.Trend analysis, common size
analysis for SBP-BSC are also included in this report.  Finally we have come towards conclusion
and recommendations. In short, it was an amazing learning experience in SBP BSC. 

6
CHAPTER: 01
INTRODUCTION
1.1 Background:
A central bank, reserve bank, or monetary authority is an institution that manages
a state's currency, money supply, and interest rates. Central banks also usually oversee
the commercial banking system of their respective countries. In contrast to a commercial bank, a
central bank possesses a monopoly on increasing the monetary base in the state, and usually also
prints the national currency, which usually serves as the state's legal tender. Central banks also
act as a "lender of last resort" to the banking sector during times of financial crisis. Most central
banks usually also have supervisory and regulatory powers to ensure the solvency of member
institutions, prevent bank runs, and prevent reckless or fraudulent behavior by member banks.
Like other Central banks State Bank of Pakistan is the central bank of Pakistan. The State Bank
of Pakistan (SBP) is incorporated under the State Bank of Pakistan Act, 1956, which gives the
Bank the authority to function as the central bank of the country. The SBP Act mandates 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.
1.2 Objective:
As we all know that state bank of Pakistan is a nonprofit making organization. Its main
objective is to manage or maintain the currency supply in country. Increase and decrease in
money supply can create inflation or deflation in country, so these things should be handled
immediately and state bank is doing this.
1.3 Vision of State Bank of Pakistan:
To transform SBP into a modern and dynamic central bank, highly professional and
efficient, fully equipped to play a meaningful role, on sustainable basis, in the economic and
social development of Pakistan.
1.4 Mission of State Bank of Pakistan:
To promote monetary and financial stability and foster and financial system, so as to
achieve sustained and equitable economic growth and prosperity in Pakistan.

7
1.5 Aims of the study:
Most of the students are not familiar with the SBP-BSC operations because these
operations are changed from normal banking process. So the aim of study is to provide a
platform to those students about State bank ofPakistan, its subsidiaries and all about its functions
and operations of SBP-BSC, as well as provide information to those who willing to join SBP-
BSc,and give some valuable suggestions to SBP-BSC about those issues that we observed there
during our internship program.
1.6 Scope of the study:
We are limiting our study only to SBP-BSC Muzaffarabad because the State Bank of
Pakistan is a largest organization and there are four subsidiaries of the bank and only BSC has 16
field offices. Thus, I’m not taking any other subsidiary or BSc field office of State Bank of
Pakistan. In this report I will discuss the State Bank of Pakistan Banking Services Corporation
Muzaffarabad, its departments, its functions as we, Trend analysis and common size analysis for
BSC Muzaffarabad.
1.7 Data and Methodology:

The report is prepared using both primary and secondary data that included the following
methodological tools.
Primary data
The data, which is collected for the first time and exist in raw form, is called primary data. It
includes:
 Personal observations during the Six-week internship program.
 Interviews and Discussion with the Bank personnel from time to time.
Secondary Data
The data gathered from existing sources are called secondary data. They are in processed form.
The main sources of secondary data of SBP-BSC are:
 Full Report on SBP-BSC
 Journals, newspapers and course books.
 Websites
 Newspapers
 Previous Internship Reports

8
CHAPTER: 02
OVERVIEW OF STATE BANK OF PAKISATAN

2.1 History of State Bank of Pakistan:

Before independence on 14 August 1947, during British colonial regime the Reserve
Bank ofIndia was the central bank for both India and Pakistan. On 30 December 1948 the
BritishGovernment's commission distributed the Reserve Bank of India's reserves between
Pakistan andIndia -30 percent for Pakistan and 70 percent for India.The losses incurred in the
transition to independence were taken from Pakistan's share (a total of230 million). In May, 1948
Muhammad Ali Jinnah (Founder of Pakistan) took steps to establishthe State Bank of Pakistan
immediately. These were implemented in June 1948, and the StateBank of Pakistan commenced
operation on July 1, 1948.Under the State Bank of Pakistan Order 1948, the State Bank of
Pakistan was charged with theduty to "regulate the issue of bank notes and keeping of reserves
with a view to securingmonetary stability in Pakistan and generally to operate the currency and
credit system of thecountry to its advantage".A large section of the state bank's duties were
widened when the State Bank of Pakistan Act1956was introduced. It required the State Bank to
"regulate the monetary and credit system ofPakistan and to foster its growth in the best national
interest with a view to securing monetarystability and fuller utilizationof the country’s
productive resources". In February 1994, the StateBank was given full autonomy, during the
financial sector reforms.
On January 21, 1997, this autonomy was further strengthened when the government
issued threeAmendment Ordinances (which were approved by the Parliament in May 1997).
Those includedwere 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 toregulate the banking sector, to conduct an independent monetary policy and to set
limit ongovernment borrowings from the State Bank of Pakistan. The amendments to the Banks
Nationalization Act brought the end of the Pakistan Banking Council (an institution established
to look after the affairs of NCBs) 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 having a role in their appointment and removal. The

9
amendments also increased the autonomy and accountability of the chief executives, the Boards
of Directors of banks and DFIs.

2.2 Functions of SBP:

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:
1) The primary functions including an 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.
2) The secondary functions including the agency function 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 the
development of a 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.
2.3 Banking:
The State Bank of Pakistan looks into a lot of different ranges of banking to deal with the
changes in economic climate and different purchasing and buying powers. Here are some of
the banking areas that the state bank looks into;
 State Bank’s Shariah Board Approves Essentials and Model Agreements for Islamic Modes
of Financing
 Procedure for Submitting Claims with SBP In Respect of Unclaimed Deposits Surrendered
By Banks/DFI’s.
 Micro Finance
 Small Medium Enterprises (SMEs)
 Minimum Capital Requirements for Banks
 Remittance Facilities in Pakistan
 Opening of Foreign Currency Accounts with Banks in Pakistan under new scheme.
 Handbook of Corporate Governance
 Guidelines on Risk Management

10
 Guidelines on Commercial Paper
 Guidelines on Securitization
 SBP Scheme for Agricultural Financing

2.4 Facilities:
 Agriculture credit
 Audit
 Banking Inspection
 Banking Policy & Regulations
 Banking Supervision
 Corporate Services
 Economic Analysis
 Financial Monitoring Unit
 Monetary Policy
 Research
 Statistics and Data Warehouse
 Exchange Policy
 Human Resource
 Information Systems & Technology
 Islamic Banking
 Legal Services
 Library

 Payment System
 Real Time Gross Settlement System (RTGS System)
 Small and Medium Enterprises
 Training and Development Department (TDD)
 Treasury Operations
 Strategic & Corporate Planning
 Microfinance
 Pakistan Remittance Initiative

11
CHAPTER: 03
STATE BANK & SUBSIDIARIES
There are four subsidiaries of SBP.
1. BSC:Banking Services Corporation.
2. NIBAF: National Institute of Banking and Finance.
3. DPC: Depositor protection Corporation.
4. PSPC: Pakistan Securities Printing Corporation:

3.1 NIBAF (National institute of banking and finance):

The state bank of Pakistan since its inception has played a pioneering role in the sphere
of banking education and training, both for its
own staff as for the banking industry in thecountry. NIBAF was established by PBC and was
taken over by SBP in 1997. The new complexof the institute is daily suited for conducting
residential training program. In which theinstitute is located, specifically for public and private
educational. Training institutions bythe government ensures peaceful and serene environment
highly congenital for academic pursuits.
Functions of NIBAF
Following are the functions which are conducted by the NIBAF
 Upcoming event
 Business plan
 International courses
 Certificate courses
 Training program material
 Requisitions
3.2 Deposit Protection Corporation (DPC)
Deposit Protection Corporation (DPC) has been established as a wholly owned subsidiary
of SBP under the DPC Act 2016. Upon commencement, this entity will be responsible to provide
protection of deposits of member financial institutions operating in Pakistan. The objective of
DPC is to compensate the depositors to the extent of protected deposits in the event of failure of
a member Financial Institution. The limit of protected deposits shall be determined by DPC and

12
will be announced in due course. For the purpose of protecting depositors of Islamic Banks and
branches, a separate Shariah compliant mechanism of deposit protection shall be put in place.

3.3 Pakistan Securities Printing Corporation:

The printing Corporation of Pakistan was established in 1969 and happens to be one of
the oldest public sector corporations in the country. It comprises of three printing presses located
respectively at Islamabad, Karachi and Lahore. The Corporation has its headquarters at
Islamabad.
The PCP offers the largest facility for offset printing in the country which is managed by a
skilled workforce of about 1200 personnel. All the units of the PCP are well equipped with
modern machinery to perform a large variety of printing jobs. The PCP has recently lunched
productivity improvement programme aimed at reducing costs and introducing creativity. It is
expected that with implementation of this programme during 2007 the efficiency and quality of
service being provided by the PCP register a quantum improvement.
In addition to performing routine printing work for various government organizations the PCP
also handles sensitive time bound printing assignment pertaining to the Budget, Elections,
Legislative proceedings, Cabinet documents etc. The PCP also prints the Extraordinary and
Weekly Gazettes issued by the Government of Pakistan which incorporates Acts passed by the
legislature, Presidential orders & ordinances, SRO's patents issued, transfers, posting and
promotions of Govt. servants etc. Both the gazettes are now available on the web site of the PCP.
3.4 SBP Banking Services Corporation (SBPBSC):
The SBP Banking Services Corporation (SBP-BSC) was established as a wholly owned
subsidiary of State Bank of Pakistan in January, 2002, under the SBP Banking Services
Corporation Ordinance 2001.
As an operational arm of the Central Bank, SBP Banking Services Corporation 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
State Bank of Pakistan, conducting development finance activities in support of the development
finance group of the SBP, implementing export refinance schemes, and adjudication, and
performing agency functions like sale/purchase of national prize bonds including managing prize
money draws, sale and purchase of national saving schemes or any other functions assigned by
State Bank of Pakistan.

13
14
3.4.1 Vision of SBPBSC:
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.
3.4.2 Mission of SBPBSC:
To provide excellent banking and financial services to stakeholders besides ensuring
implementation of SBP policies in order to command their trust and respect.

3.4.3 Hierarchy of SBP-BSC

15
16
3.4.4 Field Offices:
There are 16 field offices of State Bank of Pakistan Banking Services Corporations.
Southern Region (5 Field Offices)

1. Karachi
2. North Nazimabad
3. Hyderabad
4. Sukkur
5. Quetta

Central Region (6 Field Offices)

6. Lahore
7. Faisalabad
8. Sailkot
9. Gujrawala
10. Bhawalpur
11. Multan

Northern Region (5 Field Offices)

12. Rawalpindi
13. Islamabad
14. Peshawar
15. D I Khan
16. Muzafarabad

17
CHAPTER: 04
SBPBSC Muzaffarabad:
Like Other North Region / Field Offices of the State Bank the Muzaffarabad BSC also provides
the following Banking Services:-
 Currency Management Services (Issuance, Exchange & Destruction of Currency Notes).
 Coins Management (Supply & Receipt).
 Receipts of Governments’ Taxes & Levies.
 Management of Governments’ Payments (Salaries, Pensions & Suppliers).
 Public Debt Management (Management of National Prize Bonds & SSCs/DSCs Schemes
on behalf of Central Directorate of National Savings (CDNS), National Savings, Ministry
of Finance, Government of Pakistan, Islamabad.
 Provision of Governments’ Funds Transfer Facility.
 Locker facilities to the Government for Safe Deposit of Articles.
 Customers’ Facilitation for General Banking Complaints.
 Other Banking Services as and when required by the Government Departments.
In addition, for proper and efficient management of the business relating to the issue of notes /
currency, there is four Currency Issue Circle Offices of the Bank exist.
In short, The State Bank of Pakistan Banking Services Corporation (SBP BSC) Muzaffarabad,
has set up Customer Facilitation Centre to ensure smooth and uninterrupted functioning of
Automated Teller Machines (ATMs) of commercial banks, disbursement of loans and advances,
facilitates inter-bank settlement system and deals in prize bonds in the at MZD.
4.1 Departments or Units of SBP-BSC:
4.1.1 Prize Bond Unit:
The main function of Prize Bond Unit is the management of public debt, sale and
enhancement of prize bond draws. Payment of prize money is also the core responsibility of
Prize Bond Unit.
The Prize Bond scheme is the part of national saving scheme. The SBP-BSC provides
management services to the government for this scheme. SBP-BSC can decide about the terms
and condition of the scheme can increase or decrease the amount of prize money can change the
denomination.Public finance is a field of economics concerned with paying for collective or

18
government activities, and with the administration and design of those activities. Government
financing can be achieved by taxes, and borrowings. When government expenditure are greater
than tax revenue than government financing them through borrowing from various sources like
as borrowing from SBP, commercial banks and local public. Government Issue bonds and make
financial investments. Government debt can be categorized as internal debt, owed to lenders
within the country, and external debt, owed to foreign lenders. Governments usually barrow by
issuing securities, such as Government bonds and bills. Internal debt owed by a government as
part of the country’s national debt.
Deferent types of securities issued by the Government as well as private sector to collect
the money from public to finance them. Government of Pakistan motivates the people to invest
their extra money inn deferent types of scheme designed by Central Savings. Directorate of
Inspection and Accounts Islamabad, Training Institute of National Savings, Islamabad along
with a sub training institute at Karachi; Regional Directorates (located at Peshawar, Abbottabad,
Rawalpindi, Gujranwala, Lahore, Faisalabad, Multan, Bahawalpur, Sukkur, Hyderabad, Karachi,
and Quetta): 366 National Savings Centers scattered all over the country.
National Savings Scheme Trading in two Instruments:
Premium Bonds:
Premium Prize Bond (registered) with features of both guaranteed bi-annual profit and a
chance to win prize money through quarterly draws, was launched w.e.f 10.03.2017. Initially Rs.
40000 denomination is introduced through the SBP branches with no maximum investment limit
and no penalty in case of redemption at any time. The current profit percentage is 5 percent and
the prize money is paid through quarterly draws whereby first second and third prizes are worth
Rs.8000000; Rs3000000 and 500000(prizes), respectively. This is the first IT-Driven product of
National Savings where profit will be directly credited to the bank account of the investors
There are two kinds of Premium bonds with respect to maturity.
1. SSC: Special Saving certificate: The maturity period of SCC is three years while profit is
paid on completion of every six-month period.
2. DSC: Defense saving certificate: DSC is the saving scheme with 10 years maturity. DSC is
not enchased on maturity, the balance at credit (principle plus profit) shall be deemed to
have been reinvested without ant deduction for another period of 10 years.

19
National Prize Bonds:
National prize bond is a bearer security and is a debt which government borrows from the
general public.
The denominations of National Prize Bonds available are under as:
 RS. 100/- Student Welfare Prize bonds.
 RS. 200/- National Prize Bonds.
 RS. 750/- National Prize Bonds.
 RS. 1500/- National Prize Bonds.
 RS. 7500/- National Prize Bonds.
 RS. 15000/- National Prize Bonds.
 RS. 25000/- National Prize Bonds.
 RS. 40000/- National Prize Bonds.

Prize Bonds delivery by the Pakistan Security Corporation Limited:

The PSPC will advise the Director, Accounts Department, State Bank of Pakistan,
Central Directorate, Karachi full particulars of Prize Bonds that are printed by them. The
Director of Accounts will allocate and arrange distributions of each series of the National Prize
Bonds among the Karachi Public debt Offices (Central) under advice to them. The allocation will
be made on the basis of results of past sales at the two Public Debts Offices. The Pakistan
Security Printing Corporation will, thereafter, be advised to dispatch the Prize Bonds to the
respective Public Debt Offices accompanied by their respective in accordance will the allocation
made the Bank. The Central Directorate will also endorse copies of the allocation advices to the
Prize Bond Section dispatches the Prize Bond to Public Debt Offices Karachi and Lahore
according to their allocation for distribution among the offices under jurisdiction.

Receipts and Examination of the Prize Bond:

The Prize Bond will be receive by the Accounts office-in-Charge and there representative of
Accounts (Cash) Treasurer at each Public Debt Offices Karachi and Lahore.

Supply of Bonds to other Offices of the State Bank of Pakistan:

The Public Debt offices will responsible for the supply of Prize Bonds to other Offices of the
State Bank of Pakistan under their jurisdiction. Prize Bonds will be issued by the offices of the

20
State Bank of Pakistan at Karachi, Lahore, Quetta, Peshawar, Islamabad, Hyderabad, Multan,
Faisalabad, Rawalpindi, Sukkur, Bahawalpur, D.I.Khan, Gujrawala, Sialkot and Nazimabad.

Sale of Prize bonds:

The Prize Bond will be sold against the cash and as such no formal applications are required to
be submitted by purchasers for the purpose. The Prize bonds are bearer Bonds and as such the
selling office is not required to make any endorsement there or write the name of the purchaser
either on the Bond itself or in the teller’s sale register. However the name of the office of the
State Bank of Pakistan selling the Bonds and the date of sale of the Bonds will be affixed on the
face of the bonds at the space provided for the purpose before the Bonds are handed over to
purchasers.

Encashment of Prize Bond:

It will be open to the holders of Prize Bonds to get their holding by en-cashed it at any office of
the State Bank of Pakistan or a commercial banks or the post office throughout Pakistan
whenever they like. The State Bank of Pakistan will enc-cashed all Prize Bonds presented at their
counters irrespective of the fact whether they have been issued by them or by other field offices
of State Bank of Pakistan.
The encashment of bonds will be done at the counters of the unit. The teller in chargeof the
counter will receive the bonds tendered and examine them to ensure that:
 The bonds are genuine.
 The bonds bear the name of place and date of their issues.
 The series and number are intact and the bonds are free from mutilation.
If the teller is satisfied about the genuineness of the bonds and they are free from defects he will
enter en-cashed bonds in his register (form PB-7A).

Defaced Bonds – Disposal:

The excessively soiled, torn or mutilated etc, bonds on the payment or exchange will not be
reissued if considered unfit for circulation, no duplicate bonds in lieu thereof, will be printed and
issued, such defaced, mutilated bonds will be put out of circulation permanently by destroying
them by burning by offices after observing the following procedure:
 Ensure that bonds are recorded in register in form PB-35 PB-11 and PB-17 which will be
preserved permanently by offices under taking destruction.

21
  Before actual destruction by offices, the defaced/mutilated prize bonds should be made
up in packets (100 pieces) or in bundle of (10 pieces)
 After destroying these bonds, the stock of defaced bonds will be reduced by the offices
from the stock register PB-11 and form PB-17.

Payment of prize money:

Claim for prize money received at the Public Debt offices of issues from the following sources:
Claim lodged directly at the counter of Public Debt office.
Claim received by others offices of the State Bank of Pakistan and forwarded to the Public Debt
office of issue.
Claim received through post.
The prize money claim of Rs.1250 is counter payable within five minute after verification from
prize list and originality of prize bonds. Prize money claim from Rs. 9300 to Rs.18500 against
winning bonds are received and processed by unit. The number of prize winning bonds is
verified from the prize list and particular of the claimant are entered in register PB-18 by
assistance account officer. Thereafter on the basis of recommendation of the AAO and necessary
scrutiny the claims is passed by account officer and deliver to scrolling section of he said unit for
on ward delivery to the cash department , the cash department pay the prize money after
deduction of tax from Filer 15%and non filer 25%.

Verification of Balances of Prize Bonds:

The Chief Manager will depute an officer other than officer in charge of prize bonds to conduct
verification of the balances of prize bonds at the end of each month. The monthly verification
will be conducted by counting through Globus Software as well as physical counting of bundles
and packets. After verification, a copy of the verifying officer’s report in form PB-36 will sent to
the prize bonds section (central) Karachi.

Internal Audit of Prize Bonds Work:

The prize bonds work at the offices will be audited every month by their Internal Audit Section.
The internal audit section will particularly see that various producers and instructions lay down
by the central directorate for the conduct of prize bonds work including maintenance of accounts;
registersetc. are being meticulously followed. It is also ensure that accounts are accurately

22
prepared, checked and signed, expenditure is properly authorized and adequate provision has
been made for internal checks/counter cheeks.

4.1.2 Deposit Account Unit (DAU):

The DAU is part of the Banking Service Corporation (BSC). The DAU is responsible for
maintaining the Bank’s Accounts and also provide the Remittance to Banks. Types of services
provided by SBP BSC (Bank) to Commercial Banks through its DAU are:
Current Account
SBP BSC (Bank) provides facility to other Banks to open current in SBP BSC (Bank) with fee
charges Rs.200000. Current Account is maintained by DAU that is entrusted with the work of
opening and maintaining the Current Account of Schedule and Non-Schedule Banks, Local
Bodies and Other Foreign Banks.
There are two main reasons to open account in SBP BSC (Bank);
 When they have excess amount above their holding capacity
 For settlement of transactions with Other Banks or for Clearing purposes.
Functions:
 It deals with all the commercials bank register under SBP. There are total 30 branches
whose accounts are operated in SBP BSC. They are only the main branches of the
commercial banks.
 It deals with the transferring of the fund.
 Bank accounts are maintained.

Maintenance of CRR and SLR and in case of not maintaining CRR and SLR heavy penalties is
imposed on commercial banks.
Commercial banks accounts:
Main branch of every bank is required to maintain an account with the field office of State Bank
Pakistan. These main branches maintain the current account of their further sub branches. SBP
BSC only deals with the main branches not with the sub branches.
Pay order:
Payment order is made for local suppliers. For making payment of stationary or medicine a pay
order is issued to companies operating locally.

23
Bank draft:
Bank draft is made if supplier is not local. For making payment to companies other than your
cities.

Mail transfer:
This is for the employees of State Bank Pakistan. For example if an employee of state bank
Peshawar wants to get his salary or money in state bank Karachi they use Mail Transfer.
Telegraphic transfer:
This is bank to bank transfer e,g. UBL Muzaffarabad has excess of cash and he wants to transfer
his cash to other main branch of UBL in Lahore so the State Bank Muzaffarabad Transfer money
to SBP BSC Lahore and UBL Lahore get this Cash from SBPBSC Lahore.
Demand draft:
Demand Draft is for the employees of commercial banks if they want money they go to SBPBSC
and give a Cheque to them according to the limit of their salary and SBP BSC Debit this Cheque
to their account and give money to the person and when the money came in the account of that
person SBP BSC credit this Cheque to his account.

Clean cash:

It is record of the daily receipts and payments balance of the SBP BSC .it is also called statement
of affairs of the Bank. Maintenance and balance of cash is regulated and repeated on daily basis
to head office. All the transaction regarding cash is adjusted in this section. All vouchers at the
end of the day are recorded in the books of accounts. All the vouchers from other units are being
recorded by this department.

Attorney Maintenance.
This is that the Board of Directors of commercial banks select one person as a CEO and then
CEO gives this attorney right to one person for the transaction from accounts in SBP BSC. For
having attorney rights there is a sign of CEO and that specific employee on STAMP PAPER to
assure the soundness of the working.

4.1.3 Public Accounts Unit:

Under Section 21 of the State Bank of Pakistan Act 1956, the SBP has been entrusted to perform
banking services on behalf of the federal and provincial governments and also

24
tocarry out their exchange, remittance and other banking operations including the management
of public debt.
The banking services provided by SBP-BSC to the federal, provincial and local governments
Includes following services.
Collection of revenues on behalf of government departments i.e. Property tax,income tax, sales
tax and all other receipts of Government of Pakistan.
Making payments on behalf of government departments.
Modes of payments Modes of receipt
Cash Cash
Cheque Cheque
 The Public Accounts Unit of SBP-BSC is responsible for maintenance of 
 The federal Government A/C
 Provincial Government A/C
 Local Governments
 Zakat accounts.
 Defense A/C
The data pertaining to government transactions carried in various accounts is reported to
accountant general of the provinces, Accountant General Pakistan Revenue (AGPR), Pakistan
Railways and other concerned departments on daily/ periodic basis.
BSC provides following banking services to the government through its field offices:
 Facility of transfer of funds of government departments from one place to another.
 Payment of pensions to the pensioners of various government departments.
 Facility of safe deposit of articles to government departments, banks etc on nominal
charges.
 Other banking services as and when required by the government departments.

Public Account Unit deals with Government Departments. Every department before initiating its

operations opens an account in SBP for its financial matters. PAU runs operations of
Government Receipts and Payments through clearing, transfer or cash.
 Payments section:
 PAU mostly receives cheques by AG and AGPR office for payments.

25
  Green Cheques are for Federal Departments.
 Red Cheques are for Provincial Departments.
 After verification and payment of the cheuqes by PAU it will be send back to the
departments.
 Only registered government departments can withdraw amounts.
 The payments up-to Rs.5000 paid by TO (Treasury officer) and above Rs.5000 will be
verified by PAU.
 PAU also pays prize bonds. Up-to Rs.18000 paid in cash and above Rs.18000 will be
deposit in their accounts.

Types of Accounts
There are three types of accounts that public account unit maintain.

1. Drawing account:
 Drawing account is a general account.
 It does not have any restriction or limitation regarding amount.
 The State Bank has to pay what is drawn on it.
 The Balance of this account may be in Debit or credit.
2. Assignment Account:
 In case of certain Department, Accountant General Authorizes the bank is to open Ledger
Deposit Accounts in favor of the head of these Departments and Army unit are called
Assignment Account.
 The payments are made in certain limit (Account balance).
3. Personal Ledger Account:
 Government of Pakistan allocates a specific and limited Budget for different government
institutions.
 Those institutions are entitled to draw the amount up to the extent of their budget.
 The cheque must be endorsed by federal treasury officer (FTO).
 The State Bank of Pakistan has the right to dishonor the cheque without the endorsement.
 The cheque drawn on this account has validity of one month from issuing date.

26
Payment section
Payment on behalf of Government through instrument Functions perform by Payment Unit
 To keep specimen signatures of drawers/DDO’s records up to date
 Maintain Cheques Series advice
 Stop Cheques
 To maintain schedule 
 Pass cheques/Bills

Receipts Section:
This unit is responsible for keeping accounts of money paid into SBP BSC (Bank) for credit to
Government Account (Central and Provincial). All money that are tendered at the bank for credit
to Government Account should be accompanied by Treasury Challan in the form of prescribed
by the Government concerned are permitted to be deposited by the member of the Public direct
into the Bank for credit to Government Accounts Such as: Income Tax and Sales Tax Deposits.

 Clearing House:
 BSC (Bank) among other things also acts as a Clearing House for Commercial Banks who have
to maintain Current Accounts with banking services corporations. The SBP BSC Offices
supervise the working of the Clearing House as all the important centers where the Bank has
established its offices with the help of NIFT.

Types of clearing:
 Normal clearing 
 Intercity clearing 
 Same day clearing 
 Special Clearing

Receipts Section:
Same like the payment section public accounts unit have a receipts Section. This section received
the government payments (Payments of tax etc.) This section received the payment throw
 In cash.
 Cheques drawn on banks through clearing
 Cheques drawn on Government Account or current account maintained with the Bank.  

27
4.1.4 General Services Unit:
Vision
Our vision is to help the Bank transform into a model institution by inculcating high spirit of
service and extending unmatchable facilitation to our stakeholders.
Mission
Our mission is to provide dedicated and high quality service to our stakeholders with a sense of
warmth and friendliness. Our continuous focus would be towards preparing dynamic policies,
adopting innovative methods to solve unsolved problems and ultimately become
strategic partner in achieving the organizational objectives.
General Services Unit has been established to provide an efficient service to the BSC employees
through one-window approach. It places a renewed vigor of the management to resolve all
employee-related issues with a proactive approach and higher service delivery standards so that
they could work with more devotion and commitment.
Following are the subunits of General Services Unit:
 Employee Benefits Division
 Procurement Division
 Services Division
 Printing Press
 Medical Division
 Health Clinic
4.1.5 Staff Matters Unit (SMU) 
 Deals with the cases of transfer and posting
 Matters relating to recruitment
 Deals with disciplinary matters
 Staff is promoted on point based system 
 Seniority list and grant of annual merit increase is prepared yearly
 Case of retirement, dismissal, resignation and death of employees are also examined
 Working strength of office is also measured
 Leave record of employees in also maintained in a system
 Leave encasement is also granted to employees on the base of leave record

28
4.1.6 Access to Finance unit:

Development of an inclusive financial system in the country that could ensure access to financial
Service to all segments/sectors of the economy is an important strategic objective of
SBP. The Establishment of Development Finance Group (DFG) in SBP in the recent past is
aimed at creating the necessary institutional capacity in SBP to achieve this strategic objective.
While the DFG is engaged in enhancing its capacity to catalyze and facilitate expansion of
financial services in un-bank/under-bank areas/sectors, the group based in Karachi, has no
presence in the field to continuously interact with grassroots level stakeholders and monitor
Banks’ progress (at regional/district level) to develop and expand their Development Finance
Capacity. The SBP BSC however has presence in 16 key areas/regions across the country with
immense potential for growth of Development Finance. The Access to Finance Unit (AFU) in
the BSC is aimed at using the BSC field offices across the country to augment the DFG capacity
and its role for connecting the Un-bank/under-bank areas/sectors with the country’s financial
markets. The AFU though Based in BSC Head Office Karachi (HOK), it has gradually
established Units in 13 field offices. The Divisions/Units in the field offices are the local contact
points for continuous interaction with stakeholders.
4.1.7 Currency Management Unit 
Currency management unit involves a wide range of activities including.
 Ensuring adequate supply of good quality notes across the province.
 Examination and storage arrangements on receipt of fresh notes from PSPC,
 Maintenance of sufficient balances of currency notes/ coins.
 Withdrawal of soiled/defective notes from circulation and their destruction
under appropriate control mechanism.
Currency Management Unit CMU is the unit where all functions related to currencymanagement
handled. In this unit we learned following.
Bank and non-bank treasuries
At district treasury sub treasury the cash business of which is conducted by the bank the manager
or agent as the case may be is responsible for the provision of funds to meet the government
disbursement
 

29
Non-bank treasury
At places where the cash business is not conducted by the bank the treasury officer is responsible
to keep sufficient fund at district treasury or sub treasury
 Pre requisite of currency chest
 Existence of a standard and spacious strong room
 Arrangements for security and police guards
 Feeding arrangements with safe movements
 Posting of trained staff to handle the work 
 Means of communications for prompt reporting of government receipt and payment.
Inspection of currency chest
In terms of federal treasury rules and agreement between SBP and NBP
 NBP is responsible for safe custody of currency balances in properly strong rooms
according to their holding capacity
 SBP is allowed to access the chests for inspecting the contents arrangements for safe
custody of the balances, code books and draft forms
 This office has an annual plan to inspect chests continuously.
Role of SBP-BSC in Currency Circulation
Both the SBP and the BSC has a vital role in the currency circulation in the country through its
chests. Following are the roles of SBP in currency circulation
 Considering the request of TO ( treasury officer) to establish a chest in any area,
 To give authority to the chest to operate in that circle.
 To monitor the chest whether it’s functioning properly and accordingly to the rules and
regulations of the SBP.
The roles of BSC in currency circulation are:
 Currency management to ensure adequate supply of good quality notes and coinsacross
the country
 Banking services to federal, provincial and district government, departments, commercial
banks and SBP
 Financial policies for developing an inclusive financial system

30
National bank of Pakistan

National Bank of Pakistan is one of the largest commercial bank operating in Pakistan. It has

redefined its role and has moved from a public sector organization into a modern commercial
bank. The Bank's services are available to individuals, corporate entities and government. While
it continues to act as trustee of public funds and as the agent to the State Bank of Pakistan (in
places where SBP does not have presence).

National bank and State bank act of 1956
According to the State Bank Act of 1956, “The amount of currency and the bank notes in
circulation, which constitute the liability of the issue department shouldn’t exceed assed of that
department held in gold, coins, and sterling securities” The bank shall have sole right to issue
bank notes made payable to bearer on demand in Pakistan accordance with the provision
hereinafter made. In this act, an agreement was signed between the State bank of Pakistan and
national bank of Pakistan which included that “The national bank of Pakistan will serve the
Government Employees on behalf of the state bank of Pakistan”. SBP has only 16 field’s offices
in whole country. Therefore, in order to serve government and public, there was necessity of an
agent who works instead of them in remote areas where no office of State Bank of Pakistan
exists. Each chest report to its respective issue circles i.e. four issue circle set at SBP BSC
Karachi, Lahore, Quetta and Peshawar. Being the Agent of SBP, the national bank of Pakistan
established its chests and sub-chests across the cities and areas in the country. National Bank of
Pakistan (NBP)
has been engaged through an agency agreement signed by Finance Department, SBP with NBP
to work as agent for assisting government departments using a wide network of its1,2 4 3
branches in withdrawal/ deposit of cash and facilitating other banking transactions pertaining to
Government collections / payments etc.
Enhanced Role of Currency Chests
The network of currency chests maintained by National Bank of Pakistan (NBP) and by the
Government treasuries plays a key role in carrying out currency management function in
an effective manner. The stock of bank notes and coins held by the currency chests is also taken
into account for working out the cash reserve requirements of BSC concerned. The chest/ sub-
chests maintained with NBP branches are authorized to accept claim notes from commercial

31
banks and deposit them with BSC field offices under whose jurisdiction they fall. With a view to
minimize the expenditure on frequent dispatch on remittance, the holding capacity of NBP chests
/ sub-chests have been enhanced, in addition to setting up of more chests at different locations
across the country, ensuring the supply of bank notes both new and re-issuable with ease and less
time. Detailed information about the chests / sub-chests is available in the Annexure of this
report.

 National bank operations on behalf of state bank of Pakistan
Following are the operations conducted by the national bank of Pakistan on behalf of state bank.
Which are ;
1. Management of Government Accounts:
The maintenance, consolidation and reporting of Federal/  Provincial / District
Governments and Zakat accounts is one of the main responsibilities of the
Accounts Unit of BSC. NBP provides data on Government Accounts to the Accountant General
of provinces, Accountant General Pakistan revenue, Pakistan Railways and other Government
functionaries on daily or periodic basis.
2. Reporting of Zakat Balances
Maintenance of Zakat account including its collection, disbursement andconsolidation is another
important responsibility of Accounts Department of NBP.

3. Operational Work Relating to National Savings Schemes

Pursuant to the powers vested in the BSC Ordinance 2001, the BSC through its 16 field offices
and scheduled banks has been playing a pivotal role in savings
mobilization by managing sale/ encashment/profit payment of certificates inrespect of following 
schemes of the Central Directorate of National Savings(CDNS), Government of Pakistan:

National Prize Bonds

 National Saving Certificates.

 Special saving certificate.
 Defense saving scheme.

4. Accounting Process

32
The transactions occurring in each Currency Chest are reported to SBP BSC on daily basis
through Currency Chest Slips (A-17) also called as TE-2 form. These transactions are the
deposits and withdrawal from chest which are recorded and accounted for in the Globus system.
The total amount of Deposits and Withdrawals from all chests and their net difference are also
reported to SBP in a summarized form on a statement called F-157.Accounting entries on daily
basis are done in Globus for the total deposits, with drawls, net difference (Dr./Cr.) and for Coins
issued or received in chests. Further, accounting entries are also made for
the remittances dispatched/received from all the chests in AJK.
4.1.8 Treasury (Cash) Unit:
The Treasury (Cash) Unit is placed in immediate charge of a Currency Officer who isresponsible
to the Bank for the full management of the Issue & Treasury (Cash) Unit and for thestrict
observance of all rules and orders applicable to the working of Issue Department as laiddown in
Issue Department Manual or issued by SBP from time to time. He should be particularlycareful
to apply all the checks which have been prescribed for ensuring the safe custody andintegrity of
the balances and the correctness of the daily accounts. It is the duty of the CurrencyOfficer to
pay frequent visits to the public counters and the halls where notes or coins are beingexamined
and to see that work is carried on properly and efficiently as contemplated in theManual and
without inconvenience to the public or any wastage of Staff.
Issue and Exchange Branch:
The two main branches of the Treasury (Cash) Division/ Unit in an office of the SBP BSC
areIssue and Exchange Branches.
 Issue Branch attends to
 The receipt, safe custody and issue of fresh notes to the Exchange
 Branch and currency chests within the circle as also to other circles;
 The receipt and disposal of non-issuable notes from chests under the circle;
 The taking over from the Exchange Branch of cancelled notes pending verification.
 Exchange Branch deals with
 The exchange of notes and coin over the country.
 The cancellation of notes received and examined in the office.
 Small Coin Depot transactions and Government Stock of Surplus Rupee Coins.

33
  The exchange of small coin & uncurrent coins and other transactions between theBanking
and Issue Departments.

Working Strength of Treasury (Cash) Unit:

Functions:
 Sale / Encashment of Prize Bonds / Payment of Prize Money claims
 Sale / Encashment / Reinvestment / Payment of profit on SSC and DSC schemes.
 Collection of revenue on behalf of Central, Provincial Govt, local Govt. Authority, Banks
and SBP BSC field Offices etc.
 Issuance / Exchange of all denominations of Currency Notes.
 Exchange of all denominations of clearly payable defective / claim Notes.
 Issuance / Exchange of all denominations of Coins.
 All type of payments /Receipts from / to employees.

4.1.9 Vaults:
Following vaults are in the SBPBSC Muzaffarabad;

 Prize Bond Vault

This vault holds the prize bond which are not yet issued to the general public and also the
prize bonds that are being cashed by the general public on the counters.

 Exchange Vault
This vault contains the notes that are in the circulation for the general public, the notes that
are being exchanged for small or big denomination are kept in this vault.

 Fresh Note Vault

This vault holds the notes that are not in the circulation, it only contains the fresh note
currency.Once the notes are withdrawn from this vault than it cannot be kept again in the vault it
should be transferred to the exchange vault.

Vault Closing:
The balances are done then the box balances are transferred to the vaults in the custody of the
ACM (Cash) and ACM (IMU) both. They both have to sign the report generated by the
GlobusSystem so that the next day balance is prepared.

34
4.1.10 Counters:

The following counters are available in the banking hall of the SBPBSC Muzaffarabad for
entertaining the general public.
Defective Note Counter
This counter entertains the general public by exchanging the defective notes and giving them
fresh or re-issuable notes to anyone who appears on the counter. There is only one counter for
this purpose in the hall.
Exchange Note Counter
This counter entertains the general public by exchanging the denomination of the notes. For
example people bring notes with big denominations and gets notes of small denominations.
There is only one counter for this purpose in the hall.
Prize Bond Encashment Counter
This counter entertains the general public having bonds and willing for encashment of the face
value of their bonds. The counter provides cash against the bonds at any time one appears on the
counter. There is one counter for this purpose in the hall.
Prize Bond Sells Counter
This counter entertains the general public by selling them bonds of different denominations.
There two counters for this purpose, first counter sells the Rs. 100,750,15000 and 40000
denominations’ bonds and the second counter sells Rs. 200, 7500, 1500 and 25000
denominations’ bonds.
Government Challan Counter
This counter entertains the general public by receiving the tax on the behalf of FBR from the
demand challans.
 Fresh Notes Counter

This counter facilitates the general public when the EidulFitr and EidulAzha in about to
come.The public requires fresh note for the purpose for giving eidi to children therefore the
SBPBSC provides the fresh notes on the time.

35
CHAPTER: 05
CONCLUSION
The internship done by us in SBP BSC was an amazing experience. I can now say that I
have got much information about SBP BSC. I have almost visited all the units and have gotten
knowledge about their functions and management which have been defined in this report. This
internship report on SBP-BSC is very fruitful for in number of ways. Most of the students are not
familiar with the SBP operations because these operations are changed from normal banking
process. By this report students will know the all the working of state bank of Pakistan. State
bank of Pakistan is regulatory body. State bank is entirely responsible for monetary policy of its
country and it manages the monetary policy to regulate the economy. For stability and ensuring
economic development, monetary policy provides backbone to the country’s economic system.
Main function of the state bank is to control the money supply in the country by doing this state
bank control the inflation as well as deflation in the country. Other functions of the state bank
includes the Banker’s bank and banker to the government. State bank is providing their service to
all commercial banks as well as to the government organizations by giving receipt, transfer and
clearing facilities. Banking Services Corporation (BSC) is a fully owned subsidiary of the State
bank of Pakistan and it is called the operational arm of State bank. BSC is providing assistance to
the State bank to perform its operations on regional level efficiently and effectively. Almost BSC
is performing all functions of state bank on the regional level like currency management,
banking department etc.

36
RECOMMENDATIONS
While working in the SBP-BSC I have recognized that there are many issues regarding to
employees and regarding to systems. So I concluded some of the suggestions and
recommendations for SBP-BSC.
 There should be informal programs to reduce the communication gap between the higher
authorities and junior officer. 
 There should be separate cabins for each officer so that noise did not disturb the
employees. 
 State bank should introduce new product line like they should start to give student loan,
widow loan and house financing to poor people who cannot afford rates of commercial
banks.
 Periodic meetings should conduct to get feedback from employees.  
 Before transferring an employee to another seat he must be given an initial training by the
officer already working there. This will allow him to work independently without asking
for help in every new step. This will also save a lot of time which can be used in some
other productive activity.
 There should be separate Information desk for general public, employees, and new
internees.

37
References
http://www.sbp.org.pk/sbp_bsc/

http://www.sbp.org.pk/sbp_bsc/FieldOff.asp

http://www.sbp.org.pk/sbp_bsc/NSS

http://www.sbp.org.pk/reports/annual/ 

https://en.wikipedia.org/wiki/Central_bank

http://www.pcp.gov.pk/functions.php

http://finance.gov.pk/survey/chapters_11/Highlights_ES_201314.pdf
http://finance.gov.pk/survey/chapters_12/Highlights_ES_201314.pdf
www.commerce.gov.pk 

38