Dear Sir / Madam,

1. You are aware that State Bank of Pakistan has issued a new design banknote series which started with the issuance of Rs.20 denomination banknote in 2005 to improve the security, durability and aesthetic quality of banknotes. The process of issuance of complete series of banknotes comprising eight denominations (Rs.5, Rs.10, Rs.20, Rs.50, Rs.100, Rs.500, Rs.1000 and Rs.5000) was completed in 2008.

2. As sufficient quantities of new design banknotes have already been issued to banks / other stakeholders, it has been decided to phase out the Rs.500 denomination old design banknote, which was introduced on 1st April, 1986, in first phase.

3. Effective from 1st October, 2011, Rs.500 old design banknote will cease to be Legal Tender as per Federal Government’s Gazette Notification dated 27th December, 2010. The commercial banks will stop issuance of issuable / re-issuable Rs.500 old design banknote with effect from 1st January, 2011. However the Rs.500 old design banknote in circulation will remain Legal Tender up to 30th September, 2011 and commercial banks are required to accept the Rs. 500 old design banknotes and exchange the same with the banknotes and coins of all denominations. These notes will be surrendered to the nearest / linked Field Offices of State Bank of Pakistan, Banking Services Corporation / Chest branches of National Bank of Pakistan in suitable lots up to 30th September, 2011.

4. Further, in order to facilitate the general public and create awareness, banks are requested to place announcements on the counters in line with their “advertisement policy.”

5. In this regard you are requested to follow the instructions meticulously at para 3 and 4 above and issue necessary orders to all your branches for implementation of the instructions in letter and spirit.