State bank of pakistan

Prepared By:

Amber MemonAhsan Ali Soomro

Pareesa JunejoIqra Lagari

Seharzish Riaz

Academic Report

State Bank of Pakistan

State Bank of PakistanApril 13, 2013

Table of ContentsAcknowledgment.................................................................................................................................3

Executive Summary..............................................................................................................................4

1. Introduction.....................................................................................................................................5

1.1 History/Background....................................................................................................................5

2. Overview of Organization.................................................................................................................5

2.1 Vision.........................................................................................................................................6

2.2 Mission.......................................................................................................................................6

2.3 Core Values................................................................................................................................6

2.4 Goals..........................................................................................................................................6

3. Organizational Structure..................................................................................................................7

4. Departments of SBP.........................................................................................................................7

4.1 Deposit Accounts Dept...............................................................................................................7

4.2 Currency Management Dept.......................................................................................................8

4.3 Prize Bond and Saving Certificate Dept.......................................................................................8

4.4 Internal Monitoring Dept............................................................................................................8

4.5 Public Accounts Dept..................................................................................................................9

4.6 General Services Dept.................................................................................................................9

6. SWOT Analysis............................................................................................................................10

6.1 Strengths..................................................................................................................................10

6.2 Weaknesses..............................................................................................................................10

6.3 Opportunities...........................................................................................................................10

6.4 Threats.....................................................................................................................................10

7. Suggestions & Recommendations...................................................................................................10

8. Conclusion..................................................................................................................................11

9. References.....................................................................................................................................11

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Acknowledgment

All praise to Allah, the most merciful, kind and beneficent, and the source of all knowledge, wisdom within and beyond my comprehension. He is the only God, who can help us in every field of life. All respect and possible tributes goes to my Holy Prophet Mohammad (SAW), who is forever guidance and knowledge for all human beings on this earth.

I am greatly indebted to my learned teachers, who have given me this report. This report reflects the knowledge which I have gained from my valuable teachers.

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Executive Summary

As we all know that state bank is the central bank of Pakistan and it controls all the commercial banks which operate in Pakistan. It is a monetary body. It monitors all the commercial banks and maintains and manages the money supply in the country.

The reason why I choose this bank is because it is the central bank and the biggest bank in Pakistan. There is a large no. of departments in this bank and one can learn a large number of things in this bank. There are many departments in this bank but the departments in which are the main are public account department, deposit account department, currency management department, internal monitory department, prize bond and saving certificate deparment, general services department. Public account department perform many operations. It collects and gives payments on behalf of government. It also performs clearing. It receives checques or sends checques to NIFT for clearing purpose. Prize bond department issues prize bond to general public. It controls the overall system of prize bond and prizes I have in the city. General services department perform services like employee salaries, employ loan, NIBAF, etc. It provides all facilities to general public which it can to help or facilitate them.

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1. Introduction

1.1 History/BackgroundState bank of Pakistan is the central bank of Pakistan. It was established in 1948. Initially state bank of Pakistan was entrusted with the task to “regulate the issue of bank notes and keeping of reserves with a view to securing monetary stability in Pakistan and generally to operate the currency and credit system of the country to its advantage" (SBP order, 1948). The headquarters are located in the financial capital of Pakistan, Karachi with its second headquarters in the capital, Islamabad.

In financial sector reforms of 1994 State Bank of Pakistan got full autonomy. “On January 21, 1997 this autonomy was further strengthened when the government issued three Amendment Ordinances. These changes gave full and exclusive authority to the State Bank to regulate the banking sector, to conduct an independent monetary policy and to set limit on government borrowings from the State Bank of Pakistan” (Wikipedia, 2010). Currently its primary functions include regulating banking sector, maintenance of public accounts, devising monetary policy, management of public debt, issuance of currency notes, and maintaining inflation.

State Bank of Pakistan Banking Services Corporation SBP-BSC was established in 2002 in order to perform operational functions of SBP (SBP website). SBP-BSC is subsidiary of State Bank of Pakistan having 16 offices in major cities of the country and its key functional and operational areas include currency management, foreign exchange operations and adjudication, export finance scheme, payment & settlement systems, and banking services to the government. While State Bank of Pakistan performs the important function of policy making, SBP-BSCs handle most of the operational areas (SBP website).

2. Overview of Organization

As we all know that state bank of Pakistan is a nonprofit making organization. Its main objective is to manage or maintain the currency supply in country. Increase and decrease in money supply can create inflation or deflation in country, so these things should be handled immediately and state bank is doing this. The mission and vision of SBP is as under.

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2.1 Vision

To develop SBP-BSC into a dynamic and efficient organization equipped with requisite technology and human resource capable of extending sustainable support to the State Bank of Pakistan in achieving its objectives (SBP website).

2.2 Mission

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

2.3 Core Values

Highest standards of Integrity.

Institutionalizing teamwork and performance culture.

Excellence in service.

Advancement of skills for tomorrow’s challenges.

Awareness of social and community responsibility.

Value creation for all stakeholders.

2.4 Goals

To enhance profitability and maximization of SBP share through increasing leverage of existing customer base and diversified range of products.

Excellence in Direction

Excellence in Growth

Excellence in Performance

Excellence in Management

Excellence in Achievement

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3. Organizational Structure

In State Bank of Pakistan, the head is called “Chairman” or “President” of the Bank. And after President there is Five Broad of Directors. SBP has Seven Departments which control the working of the Divisions, Wing, Section and Regional of the state bank of Pakistan.

4. Departments of SBP

Following are various units at SBP:

4.1 Deposit Accounts Dept

Main functions of the Deposit account unit are;

1. SBP acts as a banker to banks. Commercial banks open their accounts with state bank. There are accounts of 41 banks and these accounts are maintained at deposit account unit.

2. Handles export refinance scheme.3. The facility of remittance of government payments is provided through this

department.

Chairman

Deposit Accounts Dept.

Currency Management

Dept.

Public Accounts Dept.

Prize Bond and Saving

Certificate Dept.

Internal Monitoring

Dept.

General Services Dept. IT Department

President’s Secretariat

Board of Directors

Secretary Board of Directors

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4. Account reconciliation.5. Also facilitate public remittances and fee is charged for that whereas no fee is

charged from the government.

4.2 Currency Management Dept

Currency management cycle involves a wide range of activities including:

Ensuring adequate supply of good quality notes across the country. Forecasting annual increase in currency demand. Timely placement of printing orders with Pakistan Security Printing Corporation. Examination and storage arrangements on receipt of fresh notes from PSPC. Maintenance of sufficient balances of currency notes/coins. Supply of notes in the country. Withdrawal of soiled/defective notes from circulation and their destruction

under appropriate control mechanism.

4.3 Prize Bond and Saving Certificate Dept

The Prize Bond scheme is the part of national saving scheme. The SBP provides management services to the government for this scheme. SBP can decide about the terms and conditions of the scheme can increase or decrease the amount of prize money and can change the denomination. Prize bond unit perform the following functions.

Sale and purchase of Prize bonds. Maintenance of the prize bond stock. Giving the prize money. Help in organizing draws.

Apart from prize bond this unit is involved in the management of defense saving certificates and special saving certificates. These two instruments are dealt with in the interest bearing account and the prize in non-interest bearing account of the unit.

4.4 Internal Monitoring Dept

Internal auditing is a profession and activity involved in helping organizations achieve their stated objectives. Internal monitoring unit is an independent appraisal function established within SBP to examine and evaluate its activities as a service to the organization.

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Main functions and responsibilities;

Conducting pre-audit of all accounts of the Office. Pre audit the cases and vouchers received from various units under SBP

Expenditure regulation, budgetary limit and head of accounts. Prize Bonds’ Payment cases. Export Refinance Cases before making payment to banks

4.5 Public Accounts Dept

Under Section 21 of the State Bank of Pakistan Act 1956, the SBP has been entrusted to

Perform banking services on behalf of the federal and provincial governments and also to carry out their exchange, remittance and other banking operations including the management of public debt.

The banking services provided by SBP to the federal, provincial and local governments Includes following services.

Collection of revenue on behalf of government departments.i.e. property tax, income tax, sales tax and all other receipts of Govt. of Pakistan.

Making payments on behalf of government departments. The Public Accounts Department of SBP is responsible for maintenance of:

The Federal Govt. A/C Provincial Govt. A/C Local Governments Zakat Accounts. Defense A/C

The data pertaining to government transactions carried in various accounts is reported to Accountant General of the provinces, Accountant General Pakistan Revenue (AGPR), Pakistan Railways and other concerned departments on daily/ periodic basis.

4.6 General Services Dept

The major functions of GSU are;

Disbursement of monthly salaries and allowances. Making other payments like pension, retirement. Making business plans, preparation of annual budget.

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Assessment of employee loans. Procurement of office furniture, stationary, vehicles etc. Activation and deactivation of employee medical facilities.

6. SWOT Analysis

6.1 Strengths 6.2 Weaknesses Strong internal control for transactions

therefore no fraud has ever been done Job security, good salary packages and

benefits for employees attract and retain talent.

Technological backwardness. Latest procedures and best practices

are not adopted. Staff is not well trained in IT.

6.3 Opportunities 6.4 Threats Investment in IT and latest technology. Political instability and pressure can

harm the operations of SBP. Excessive government borrowings. Circulation of fake currency.

7. Suggestions & Recommendations

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

Cheque Transaction System. Online data usage to save time. Token issuing and cash counters should be placed together.

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Proper display on all counters. Software’s should be updated. Removing communication gap.

8. Conclusion

SBP greatest strength is their financial background, which happens to be so strong that even in current market situation they are still in the position to lend loans to other banks and have also reported profits in the previous quarter.

SBP has gathered large amount of the market for itself. They need to put in systems such as a strong Employee Monitoring System which provides transparency in all their processes and employee activity. They can and must learn from the best case practices of other bank international as well.

9. References

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

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http://www.google.com.pk/

http://www.wikipidia.com/

http://www.sbp.gov.pk/

Government & Nonprofit

State bank of pakistan