FUNDAMENTALS OF CURRENCY MANAGEMENT

05
Currency Management &
Accounts

Learning Outcomes:
• How is distribution of currency carried out and managed in Pakistan?
• What is the role of the Currency Management and Accounts ( CMA) Division?
• What systems of currency accounting are in place?
• How is the Currency in Circulation (CIC) calculated on daily basis?

Overview ISSUE DEPARTMENT

Issue & Treasury

CMA Division
(Cash) Division

Issue Section Verification

Exchange Section Claims

Banking Section Resource

Vaults NBP Chests/Accounts

Examination Halls

Geographical Limit Circle of Issue

Sindh Province Karachi

Punjab Province, AJK, Gilgit Baltistan Lahore

KPK Province Peshawar

Balochistan Province Quetta

FUNDAMENTALS OF CURRENCY MANAGEMENT | Currency Management & Accounts PG 1

How is distribution of currency
carried out in Pakistan?
Karachi Circle Lahore Circle Peshawar Circle Quetta Circle
SBP BSC Karachi SBP BSC Lahore SBP BSC Peshawar SBP BSC Quetta

03 SBP BSC 08 SBP BSC 01 SBP BSC

Offices Offices Office

33 Chest
Branches
49 Chest
18 Chest 26 Chest
Branches
Branches Branches
including GB

53 Sub Chest 51 Sub Chest

Branches Branches

How is movement of currency managed in

Pakistan?

FUNDAMENTALS OF CURRENCY MANAGEMENT | Currency Management & Accounts PG 2

What is the role of Currency Management and
Accounts ( CMA) Division?
The Currency Management & Accounts Division
consists of the following units:
o Cancelled Notes Verification Unit
o Claims Notes Unit
o Currency Accounts Unit
o Resource Unit:
The Resource Unit attends to the supply of notes
and coins at different centers (Chests) and keeps
proper accounts thereof.
ASSETS AND LIABILITIES OF ISSUE
DEPARTMENT

o Resource Unit o The liabilities of the Issue Department comprise

of notes held in the Banking Department and
WORKING OF CMA notes in circulation.

o Cancelled Notes Verification Unit:
The Cancelled Notes Verification (CNV) Unit takes
over paid and cancelled notes,
subjects the same to both quantity and quality
checks and issues warrants of destruction.
Thereafter, the notes are destroyed by shredding or
by burning in the incinerator.
o Claims Notes Unit:
The Claim Notes Unit deals with all the
applications for payment of exchange value of
mutilated and other claimed notes and maintains
their account. It also deals with imperfect and
forged notes received in the office.
o The assets of the Issue Department are held in
the form of gold coin and bullion, silver bullion,
Rupee coin, approved securities and approved
foreign exchange including SDR.
• SDRs are defined in terms of a basket of
major currencies used in international
trade and finance. At present, the
currencies in the basket are the euro, the
pound sterling, the Japanese yen and the
US dollar.
• For the period 2015-present the
composition is:
USD 41.73%

o Currency Accounts Unit: Euro 30.93%

The Currency Accounts Units maintains proforma CNY 10.92%

accounts of the balances and transactions of notes
and the assets of the Issue Department, transactions JPY 8.33%
between the Banking Department and Issue
Department, and also the accounts of the Small GBP 8.09%
Coin Depot and the government stock of surplus
Rupee coin maintained in the office.

FUNDAMENTALS OF CURRENCY MANAGEMENT | Currency Management & Accounts PG 3

What systems of currency accounting are in place?
HOME NOTE ACCOUNT Different heads under Home Note Account:

Home Note Account provides information o Currency

regarding
o Stock
o Total value of notes in stock.
o Exchange Note Account
o Value of notes in circulation.
o Circulation Account
o Daily transactions of notes.
o Invoiced Notes
o Notes defaced and destroyed
o Cancelled Notes
o Stock positions at Chests and Sub Chests.
o Currency Chest Notes

Home Note Account

Debit Credit Description
Currency All notes printed by PSPC less all notes destroyed
Account
Stock Account Fresh notes in stock at Issue Offices – Main Vault
Exchange Notes Fresh/Re-issue notes at BSC Issue Offices – Exchange Vault
Account & Guarantee Vault
Circulation Account All notes held by Public & Commercial Banks
Invoiced Notes Chest Notes pending verification at BSC Offices
Account
Currency Chest Notes held at Chests
Notes Account
Cancelled Notes Cancelled notes awaiting destruction
Account
Net Debit = Net Credit

FUNDAMENTALS OF CURRENCY MANAGEMENT | Currency Management & Accounts PG 4

 VALUE ACCOUNT

o Value Account refers to the value or reserves

o Net at debit of the remaining heads of Value
held by SBP against the notes in circulation. Account.

o Reserves include gold coin, gold bullion silver o The agreement of these balances will indicate that
bullion, SDR, approved foreign exchange and the transactions affecting the various heads in the
rupee coins and approved securities. two sets of accounts have been correctly booked.

o The sum total of the assets of entire Issue
Department should agree with the total value of
notes in circulation.
AGREEMENT OF BALANCES
o At debit of “Circulation” in the Home Note
Account.
o If there is in the Home Note Account an entry under
“Circulation”, there should ordinarily be in the Value
Account an opposite entry of the same value under
“Currency Officer of Issue” and vice versa.
o Sometimes instead of one gross entry, the net result
of two or more entries corresponds with the opposite
entry.

o At credit “Currency Officer of Issue” in the

Value Account.

Value Account

Debit Credit Description

Currency Officer of Value equal to CIC

Issue
Reserve Account Reserve Coin, Gold & Silver
Exchange Coin Account Coins in the Exchange Branch
Currency Chest Coin, Gold & Silver held by Chests
SDRs Special Drawing Rights
Foreign Currency Reserves Foreign Currency Reserves
GOP Securities GOP Securities
Foreign Circle Adjustment of transactions between circles
Foreign Circle Adjusting Adjustments at end of Fiscal Years
Account
SBP Adjusting Account As per instructions from SBP
Net Debit = Net
Credit

FUNDAMENTALS OF CURRENCY MANAGEMENT | Currency Management & Accounts PG 5

CIRCULATION ACCOUNT

Circulation Account
Debit Credit
Notes Issued to the public in exchange of notes Notes Received from the public in exchange of
or coins or both over the counters of the BSC notes or coins or both over the counters of the
Office BSC Office

Notes Issued at Chests maintained at Notes Received at Chests maintained at

Government Treasuries and Sub-treasuries or Government Treasuries and Sub-treasuries or
branches of the National Bank of Pakistan branches of the National Bank of Pakistan

Notes issued to the Banking Department Notes received from the Banking Department

The Net Debit Balance under this head represents the total value along with denomination and design wise
details held with general public and commercial banks (i.e., CIC).

FUNDAMENTALS OF CURRENCY MANAGEMENT | Currency Management & Accounts PG 6

 How is the Currency in Circulation (CIC)
calculated on daily basis?
NBP Chests -
BSC Sialkot Lahore BSC Faisalabad
BSC Gujranwala BSC Islamabad

BSC Multan BSC Lahore BSC Rawalpindi

BSC Bahawalpur BSC Muzzafarabad

NBP Chests - NBP Chests -

Peshawar Quetta

BSC Karachi
BSC Peshawar BSC Quetta
Office

NBP Chests -
BSC D.I. Khan Karachi

Finance
Department
SBP

FUNDAMENTALS OF CURRENCY MANAGEMENT | Currency Management and Accounts PG 7