A
system of effective internal control is an essential component
of the banks/MFB’s management and foundation for the
safe and sound operation. Given the sensitivity of the payment
instruments, the banks/MFBs are vulnerable to fraud attempts
and losses. In view of the inherent operational risks in
processing, cancellation and issuance of Payment Order/Demand
Draft/Cash Deposit Receipt/Banker’s Cheque (hereinafter
collectively referred as the Payment Instruments), it has
been decided that henceforth the banks/MFBs shall strictly
observe the following controls, in addition to those already
in place for the purpose:
1 General Instructions:
1.1
Before processing the request for purchase of the Payment
Instruments, the banks/MFBs shall ensure that the purchaser
has properly:
1.1.1
narrated the name, Computerized National Identity Card Number/Smart
National Identity Card Number, National Tax Number (for
corporate entities), complete address, and contact details
of both the purchaser and the beneficiary in the Payment
Instrument purchase form;
1.1.2
described the purpose for which the Payment Instrument is
required;
1.1.3
declare that information provided in the form is correct
and verifiable with all risks and consequences on the part
of the purchaser.
2
Issuance of the Duplicate Payment Instrument:
2.1
Before issuance of Duplicate Payment Instrument, the banks/MFBs
shall obtain from the purchaser:
2.1.1
Police Daily Diary Report No./copy of the FIR regarding
loss of the original Payment Instrument;
2.1.2
affidavit on non judicial stamp paper to the effect that
original Payment Instrument has been lost before its delivery
to the intended beneficiary, wherein he/she shall provide
indemnity bond favoring the bank/MFB against all claims,
suits, proceedings, actions, costs, losses, charges and
expenses, which may arise against or suffered by the bank/MFB
in consequence of paying the amount of the Payment Instrument.
The related format may also be got vetted from the bank’s
Legal advisor/Legal Department.
2.2
The banks/MFBs shall:
2.2.1
immediately mark the original Payment Instrument as “CANCELLED”
in the system before issuance of duplicate Payment Instrument
to the purchaser;
2.2.2
specifically mark the subsequent Payment Instrument as “DUPLICATE”.
3
Cancellation/Refund of Duplicate Payment Instrument:
3.1
The banks/MFBs shall prescribe limits on the amount of Payment
Instrument that may be subjected to the following requirements
for cancellation/refund of Duplicate Payment Instrument:
3.1.1
lawful discharge of the beneficiary for cancellation/refund
of the Duplicate Payment Instrument in favor of the purchaser;
3.1.2
the purchaser’s undertaking as to the genuineness
of the beneficiary’s discharge in the Payment Instrument
cancellation/refund request.
3.2
The banks/MFBs shall promptly process request for cancellation/refund
of the Payment Instruments where:
3.2.1
no Duplicate Payment Instrument, irrespective of any amount,
has been issued;
3.2.2
the purchaser is the holder of the original Payment Instrument.
4
Miscellaneous:
4.1
The banks/MFBs shall:
4.1.1
devise a standardized Payment Instrument Verification Form;
4.1.2
upon request from the beneficiary(ies), verify the genuineness
of the Payment Instrument along with other related details
(number, amount, date, beneficiary/purchaser detail, etc.)
free of cost/service charges;
4.1.3
retain a copy of the Payment Instrument Verification Form
in line with record retention policy;
4.1.4
put in place stringent internal controls for printing, stock
taking, issuance and storage of stationery used for printing
of the Payment Instruments. All these arrangements shall
be subject to regular review by the Internal Audit of the
banks/MFBs;
4.1.5
customize and adopt the security features for printing of
the Payment Instruments as prescribed for printing of cheques
by the State Bank of Pakistan from time to time;
4.1.6
make available Instant Verification Markers at branches
as well as at all clearing units whereby authenticity of
the Payment Instruments, for an amount over a limit to be
specified by the banks/MFBs, is to be verified;
4.1.7
endeavour to immediately resolve the disputed Payment Instruments
transactions in accordance with applicable laws/rules/regulations
and banks’/MFBs’ own policies.
5
The banks/MFBs shall adhere to above instructions in letter
and spirit. Any deviation or non-compliance of the above
instructions shall attract punitive action against delinquent
banks/MFBs under the relevant provisions of the laws.
Please
acknowledge receipt.