I am pleased to present the Annual Performance Review of SBP Banking
Services Corporation for the financial year 2016-17 during which the
Corporation made impressive strides in all spheres of its operations. The
performance of SBP BSC during the year witnessed significant progress
towards automation in its core business functions and various business
process re-engineering initiatives. On the strategic front, the proposed
amendments in SBP BSC Ordinance 2001 have been recommended by the
Committee of the Cabinet for Disposal of Legislative Cases (CCLC) to the
National Assembly for approval. The proposed Bill, when enacted will go a
long way in improving the governance framework of SBP BSC and support
it in meeting its strategic objectives. The year also witnessed major developments towards
implementation of organizational restructuring of the Corporation as selection process for posting
of Group Heads was completed, albeit only two have joined until now and the position of third
Group Head is still vacant, which is likely to be filled in during next year. The management
continued its efforts to make the office of the Regional Head more effective. Resultantly, the
Regional Heads have started providing overall guidance to offices falling in their respective
regions, in addition to providing their feedback on major issues relating to these offices to
departments at Head Office. Implementation of restructuring arrangements of SBP BSC has started showing improvement in internal controls, enhancement in efficiency of our operations, besides
allowing the Managing Director to focus more on strategic matters.
During the year, SBP BSC continued to provide banking services to the Federal, Provincial, Local
Governments and their attached departments by processing around 7.04 million transactions.
Moreover, the Federal Board of Revenue was facilitated in collection of taxes of Rs 3,394.8 billion,
reflecting an increase of 7% over the previous year. In line with the Vision 2020 of SBP, major
initiatives undertaken towards automation of banking transactions include: the implementation of
e-cheques reconciliation of Financial Accounting & Budgeting System (FABS), payment of sales
tax refund through consolidated authority and collection of Government taxes through Electronic
Fund Transfer. Efforts were also initiated for use of alternate delivery channels for collection of
government revenues. During the year, the State Bank approved one provincial bank as its agent
for collection of provincial taxes.
With the roll-out of Currency Management Strategy, the outgoing financial year witnessed a
paradigm shift in currency processing/handling across the banking sector as not only the central
bank, but also the commercial banks embarked upon the journey of automating their cash handling
practices. Further, in view of the changing business dynamics and to bring our practices at par with
global standards, an immediate need was felt to undertake further measures within SBP BSC on
priority basis to handle increased influx of soiled bank notes as a sequel to automation of currency
management by banks. In order to fully automate front and back-end cash processing, the
management carried out a comprehensive Need Assessment for the requirements of cash handling
machines. Accordingly, it proposed a three-phased strategy for installation of a mix of high-end
and medium sized banknote processing machines and off-line banknote destruction systems which
was approved by the Board of Directors of SBP BSC. We are now initiating phase II of the project
which envisages procurement of four Banknote Processing and Authentication System (BPAS)
machines and four Banknote Destruction Systems (BDS) along with other machines by December 2018.
Another major milestone was issuance of fresh notes through 8877-SMS service for the third
consecutive year. During Eid-ul-Fitr 2017, the scope of SMS-based service for issuance of fresh
Message from Managing Director, SBP Banking Services Corporation
notes was broadened to 1,002 branches of banks in 120 cities across the country. The service
received an overwhelming response from the general public which can be gauged from the fact that
around 90% of branches in big cities like Karachi, Lahore, Faisalabad and Multan had reached
their maximum limit in first four days of the launch of the service. Later, the limits for majority of
branches were enhanced. Through this service, Rs 25 billion worth of small denomination notes
were issued to around 1.5 million people. The cooperation extended by Pakistan Banks’ Association in implementation of this service remained encouraging and forward looking. Another
worthwhile achievement is the migration of Currency Globus system to T-24 platform, for which
our teams at Field Offices and Head Office worked tirelessly with the teams of the Information
Systems Department of SBP. The T-24 module for banking is also likely to go live in due course.
As an agent to the Government, the SBP BSC has been actively engaged in managing operations of
various public debt schemes of the Central Directorate of National Savings (CDNS), particularly
National Prize Bond (Bearer) for sale, encashment, conducting draws and prize money payments
etc. During the year 2017, a new registered prize bond scheme called “Premium Prize Bond
(Registered)” worth Rs 40,000/- was launched by CDNS, through offices of SBP BSC. The SBP
BSC team provided active support and guidance to CDNS in the development and implementation
of this scheme. Likewise, efforts are also underway, in coordination with the management of
CDNS, for launch of Rs 100,000/- denomination Registered Prize Bond. Further, opportunities are
also being explored to enhance the outreach of this scheme by utilizing branch network of
commercial banks, in addition to consideration for SCRIPLESS structure.
Foreign Exchange Operations Department, which was traditionally reliant on manual work management,
has embarked upon a transformation process, shifting its focus from manual transaction
processing to an automated workflow management. In this regard, it has taken various initiatives
for establishing efficient oversight on trade/foreign exchange transactions on off-site basis. After
the issuance of electronic ‘E’ and ‘I’ forms, the Department has been endeavoring towards the
automation of verification of performance of exporters in an efficacious manner that will result in
verification of more than half a million entries in an automated manner, thus achieving significant
reduction in turnaround time. An automated Airport Booth System has been developed for
capturing the data of Export and Import of foreign currency by Exchange Companies, against
permission granted by Exchange Policy Department of SBP, through SBP-Customs booths in order
to ensure timely repatriation of foreign exchange against the export of different currencies.
Going forward, there are plans to pursue multi-pronged strategy to strengthen FX framework
through automation of work flows, transformation from management of FX transactions to off-site
monitoring, development of a smart reporting system and a database accessible to Authorized
Dealers for evaluating performance of exporters. FEOD approved 17,000 cases of commercial,
private and trade related remittances during the FY17. Automation of work flows is a step forward
towards implementing an integral component of Strategic Goal (SG6) and corresponding Tactical
Objective (TO6) of SBP Vision 2020. The program envisages improving work environment in SBP
and SBP BSC by capturing, storing and sharing knowledge of the Bank, facilitating easy access to
documents and reducing document search time by designing, building and managing centralized
repository of information and knowledge. This project has been made part of the Knowledge
Management framework of the Corporation.
A system of monitoring of trade based transactions has also been put in place. In addition to
centralized monitoring, a unit at Lahore has been established to coordinate with Authorized Dealers
of North and Central regions. As a result of monitoring, FEOD has unearthed duplicate import
payment of USD 40.5 million, out of which USD 21 million, got repatriated. The FEOD also
referred instances of export on fake E-forms of USD 130 million to FIA. The enhanced monitoring
of FX trade transaction as reported in International Transactions Reporting System and Export
Overdue Reporting System helped FEOD in identifying thousands of incidents of non reporting of
export overdue, which were effectively followed by both FEOD and FEAD. These efforts helped
in repatriation of around USD 317.67 million from overdue export proceeds by FEOD without
resorting to litigation. The effective and persistent foreign exchange adjudication process has also
led to realization of stuck up export proceeds of around USD 78.7 million in FY17, which was
36% higher than the stuck up export proceeds realized by FEAD during last year.
FEOD efficiently managed around 12 different subsidy schemes of the Federal Government for
exporters and disbursed Rs 30 billion during FY17. FEOD team worked very hard to ensure that
exporters receive their claims on time and managed to disburse the budget received just a few
working days before the close of the financial year.
Besides improving the internal processes, attention has also been given to capacity building not
only of the Department, but also of Authorized Dealers. FEOD launched a 12-day Foreign Trade
Certification Program with the help of National Institute of Banking & Finance (NIBAF), besides
conducting various short programs during FY17.
During FY16, the offices disbursed Rs 500.09 billion and Rs 81 billion under the Export Finance
Schemes and Islamic Export Refinance Schemes of SBP. The DFSD and its units across BSC also
facilitated DFG in implementation of a number of initiatives/ programs through its Access to Finance
Units (AFUs) for information dissemination, capacity building, awareness creation, and development of
linkages with stakeholders in SMEs, infrastructure & housing finance, agriculture and horticulture sectors
etc.
During the year, SBP BSC Field Offices conducted 26 meetings of the focus group on agricultural
finance, which contributed effectively in helping the commercial banks to disburse an amount of
Rs 704.5 billion to the agricultural sector as against the set target of Rs 700 billion. The Field
Offices also held a number of such meetings in the areas of SME Finance, Microfinance, Islamic
Banking and Housing Finance. Likewise, Rs 481 billion and Rs 92 billion were disbursed by Field
Offices to commercial banks as refinance under the Export Finance Scheme and Islamic Export
Refinance Scheme respectively. The compliance to SBP’s instructions issued under these schemes
was also ensured through on-site verification of more than 13,000 cases during the year. Moreover,
a number of initiatives, including the conduct of various training sessions at NIBAF, Islamabad and
dissemination of Development Finance Group of SBP policy initiatives regarding Islamic Banking,
Agricultural Finance, Microfinance, SME Finance and Housing Finance helped us to expand
outreach of financial services at grassroots level. Further, there was significant progress regarding
National Financial Literacy Program (NFLP) during the year under review, with the successful
conduct of a week-long Training of Trainers (TOT) for SBP BSC officers where 23 Master Trainers
were identified. These Master Trainers conducted 14 mock sessions for over 200 community
members and further facilitated in imparting training to 87 Field Trainers from banks.
In order to meet the HR Gap created due to early retirements, 276 officers have been inducted into
SBP BSC during the year under its management trainee schemes in OG-1 and OG-2 grades,
besides induction of specialized professionals in the Forex Trade, Engineering, Procurement and
Security areas. Further, various Organization Development initiatives were successfully undertaken
that broadly included the review of our HR policies, merger of Cash and General Sides, conduct of
Workload Analysis through independent external consultants with the objective to systematically
identify the HR needs, strengthening of PMS, including automation and successful implementation
of Mid-year Performance Review, conduct of Management Development Centers through external
consultants to identify Management Development needs in a structured manner etc. The management
has consistently focused on capacity building of HR through participation of suitable
employees in training programs at NIBAF, renowned domestic training institutions like IBA,
LUMS, PSTD, IBP etc., as well as foreign training institutes/conferences and seminars. As a result
of these initiatives, a total of 2,277 participants attended various training programs during the year,
including pre-induction trainings.
I must acknowledge the continuous improvement initiatives undertaken in Support Services cluster
including Engineering, General Services and Internal Bank Security departments which are
providing common services to SBP, SBP BSC and NIBAF. The procurement management
framework has been streamlined to meet the desired procurement needs and timelines across
multiple areas like IT, consultancy, general services and goods in compliance with PPRA rules.
Further, Bank’s security framework has been strengthened through multiple security arrangements
that included the establishment of fire and safety mechanism. Initiatives are also being undertaken
to upgrade the security systems through IP-based surveillance system and e-fencing of SBP
buildings. Moreover, several re-construction, renovation of existing buildings as well as work on
new buildings are being carried out to improve the housing of SBP BSC offices.
A number of activities are being performed by SBP BSC in pursuance of Corporate Social
Responsibility (CSR) which include: (i) Summer/Winter Internship Programs offered to the
students of Pakistani universities/institutes, which provide students an insight about our core
functions and working (ii) Outreach Programs in the shape of conferences/seminars/exhibitions/
workshops/capacity building programs etc., aimed at educating the stakeholders/academia/general
public about topical issues, and (iii) Promotion of sports and healthy recreational activities, which
has earned a good name for both the State Bank and SBP BSC. The notable activities in the arena
of sports & recreational activities included the holding of SBP Governor’s Cup Interbank Regional
Cricket at seven offices, SBP Governor’s Cup Interbank Super Series Cricket Tournament 2016-17
at Islamabad and also some other tournaments, display of outstanding performance by SBP cricket
team at various national level tournaments and holding of a grand Fun Gala and musical event
during FY17.
I feel happy to note that SBP BSC has been successful in making significant progress, not only in
line with its own Mission and Vision, but it also fully supported the State Bank by performing the
role assigned to it, in an efficient and effective manner. I would like to acknowledge the hard work
and commitment of the management team, officers and the staff of SBP BSC towards achievement
of our strategic objectives. Finally, I would like to place on record my deepest appreciation to the
Governor and the members of SBP BSC Board for their continued support and guidance provided
to the Corporation without which it would have been difficult to achieve various milestones during
the outgoing year..
QASIM NAWAZ
Managing Director
SBP Banking
Services Corporation