Currency management State Bank unveils new penalty structure

The State Bank of Pakistan (SBP) has introduced a new penalty structure for cash processing functions under the currency management strategy. Under the new penalty structure, the SBP will impose fine up to Rs 0.1 million for noncompliance of instructions under the currency management strategy. The SBP vide FD Circular No.3/2015, dated August 26, 2015 issued the currency management strategy, which envisages transformation of currency management functions from manual to automated environment and revamping the cash processing operations across the banking industry as per international best practices.
In order to align the existing penalty regime for cash processing functions with the currency management strategy, the SBP has developed a new penalty structure. This new penalty structure will supersede all previous penalty instructions regarding cash management operations of banks, according to FD Circular No. 04/2017 issued on Thursday. The SBP has advised all banks to ensure strict compliance with the currency management instructions issued from time to time as any violation thereof would attract punitive action as per above referred penalty structure.
As per new penalty structure, a fine of Rs 0.1 million will be imposed on Currency Processing Center (CPC)/feeding branch/standalone branch, in case of issuance of unauthenticated and unprocessed banknotes to public. A penalty of Rs 20,000 will be imposed if CPC/feeding branches/other branches do not have separate clean and secure vault space, with proper sate keeping arrangements or the entire CPC/sorting area is not covered by high resolution cameras.
While, in case of recording of cameras is not available for three months Rs 10,000 per day penalty will be imposed. The bank has to pay fine of Rs 5,000, if the police verification of all employees deployed at CPC/feeding branches is not available or record of visitors is not maintained. As per the currency management strategy, banks have been asked to surrender suspected counterfeit banknotes to SBPBSC within 48 hours of detection along with all particulars and record. Banks will be penalized Rs 30,000 for noncompliance of this instruction.
A fine of Rs 20,000 will be imposed, if packets and bundles are not prepared/packed as per requisite specification or cash deposits with SBP BSC have not been packed as per packing instructions. A minimum Rs 5,000 and maximum Rs 0.1 million fine, depending upon the severity of instance, will be imposed for noncompliance and circumvention of the instructions issued by SBP relating to CPC/feeding branch or standalone branch.
In another category of ATM cash feeding, Rs 0.1 million penalty will be imposed if machine authenticated and sorted cash is not being fed into ATMs. Bank has to pay Rs 20,000 penalty, if CCTV and documentation record for one month is not available or CCTV record of all disputed cases is not available.
The SBP has also announced penalty scales pertaining to irregularities specifically for issuance of fresh cash over specific events eg Eids, Christmas, etc. A penalty, of Rs 20,000 per bundle found in market or Rs 10,000 per 5 packets found in series, will be imposed if fresh banknotes issued to a commercial bank for specific events are found in the informal market during the mystery shopping.
In addition a fine of Rs 50,000 will be imposed, if zonal/feeding branches do not ensure replenishment of authorized branches as per time, demand, supply and quota. Bank has to pay a penalty of Rs 10,000, if bank branches do not ensure issuance of fresh cash to general public over the counter or against requests received through SMS, as per quotas and stocks available.