The SBP Banking Services
Corporation continued to strive towards
achieving excellence in delivering
quality services to all its customers
and stakeholders by making efforts
to accelerate automation of its core
and support functions through business
process re-engineering, which resulted
in efficient workload management,
reduced turn-around time and better
risk management.
The efforts to restructure
the Corporation have also made considerable
headway this year as all Group and
Regional Heads have taken charge of
their respective functions. These
measures will facilitate SBP BSC in
improving its service standards further,
despite increase in the quantum of
work and the changing market expectations.
In line with State Bank’s primary
responsibility to maintain a safe
and efficient national payment system,
the SBP BSC serves as a Banker to
the Governments (Federal/Provincial/District),
Banks and Development Finance Institutions
(DFIs). SBP BSC also provides various
banking services to SBP and its subsidiaries.
All these services are primarily performed
by its 16 Field Offices and a wide
network of authorized branches of
National Bank of Pakistan. Moreover,
the Bank of Punjab is also providing
collection service to the Government
of Punjab. Besides extending these
services, the Accounts Department
of SBP BSC continued to undertake
its responsibility diligently regarding
provision of technical and operational
support, data collection & consolidation
and its reporting to SBP and major
government authorities on periodic
and need basis.
In line with SBP
Vision 2020, SBP BSC worked in close
coordination with the Finance Department
of SBP, to bring critical improvements
in key operational areas of payment
and financial systems of the country,
in general, and in rolling out government
collections through Alternative Delivery
Channels (ADCs), in particular. The
taxpayers using ADCs can now directly
deposit their dues in government accounts
using ATMs and internet banking without
visiting banks’ branches. The
new initiative started in March, 2018
and has led to collection of Rs 1.0
billion from taxpayers until June
2018. It is expected to be a major
channel for deposit of government
taxes in future on account of ease
and convenience in its use. A major
initiative of the current year was
upgradation of the core banking system
from Globus G-11 to a more advanced
T-24 platform. The Information Systems
Department (ISD)-SBP, was given active
support from a large number of super
users from Accounts Department, Strategic
& Corporate Affairs Department
(SCAD) as well as Field Offices of
SBP BSC. The upgrade exercise involved
conducting multiple mock excercises
and User Acceptance Tests (UATs),
and has resulted in improved system
performance, better control environment,
efficient archiving functionality
and robust disaster recovery options.
During FY18, SBP
BSC processed approximately 8.0 million
transactions of government payments/receipts,
registering an increase of 14.5% over
the past year. SBP BSC, with the assistance
of other players, helped in collection
of over Rs 3.9 trillion tax revenue
during FY18 i.e. 15% higher than last
year. Banks deducted and deposited
with SBP BSC an aggregate amount of
Rs 7.3 billion as Zakat during the
year. Despite growth in electronic
banking transactions, the instrument-based
payments did not see any decline as
National Institutional Facilitation
Technologies (NIFT ) processed 64.7
million instruments during FY18 as
compared to 64.5 million in FY17.
Notes-in-circulation (NIC) has been
increasing steadily in the economy;
on an aggregate basis the notes in
circulation doubled during the last
four years, thus posing a serious
challenge of smooth distribution of
fresh notes and lifting of high quantum
of soiled notes from the market for
subsequent destruction. Despite reduction
in work force, the Currency Management
Department of SBP BSC took various
initiatives to ensure smooth and consistent
supply of fresh notes throughout the
year, especially during religious
festivals and managed issuance of
fresh notes amounting to Rs 1,199
billion to banks and public –
a 25% increase over last year.
Like previous years,
8877 SMS service remained an effective
tool for issuance of fresh notes of
small denomination to the general
public during the month of Ramadan
as 1,519 designated branches of commercial
banks and 16 Field Offices of SBP
BSC jointly issued over Rs 40 billion
to 2.2 million members of general
public in 132 cities across Pakistan,
as compared against Rs 25 billion
issued to 1.5 million people in 120
cities last year. Additionally, Rs
367 billion were issued to commercial
banks for their ATM operations and
meeting the demands of their customers.
To help Payment Systems Department
(PSD) of SBP keep an effective oversight
on ATM operations of banks during
Ramadan, SBP BSC deployed dedicated
verification teams across Pakistan
and provided feedback to PSD by using
a real-time complaint management regime
through messaging service to dedicated
WhatsApp groups. This helped the PSD
in identifying the real cause for
ATM downtime.
To improve banknotes
distribution strategy, SBP BSC, in
close coordination with Finance Department
of SBP, developed and promoted “Interbank
Exchange of Cash” platform as
a pure market mechanism, enabling
banks to handle daily demand/supply
of fit banknotes independently. This
will eventually limit the role of
SBP BSC, in line with international
best practices relating to the issuance
of fresh notes only, and lifting of
soiled notes from the market for destruction.
In the pursuit of
Currency Management Strategy (CMS),
the Corporation is in the advanced
stages of procuring state-of-the-art
processing, authenticating, and destruction
systems for its major Field Offices.
Likewise, all Field Offices have been
equipped with desktop and countertop
note sorters for processing of heavy
amount of cash and ensuring provision
of 100% machine authenticated banknotes
at their cash counters. It is anticipated
that the acquisition of Pakistan Security
Printing Corporation (PSPC) by SBP
will further augment efforts for effective
currency management. These significant
achievements are paving the way for
a modern and fully automated cash
market in Pakistan.
SBP BSC manages various
savings schemes and National Prize
Bonds (Registered and Bearer) on behalf
of the Central Directorate of National
Savings (CDNS). With a view to facilitating
the holders of National Prize Bonds
(NPBs), SBP BSC offered them a new
option to receive payment of higher
prize money as well as the face value
of Prize-winning Bonds, through direct
credit into their bank accounts. Encouraged
by the overwhelming public response
to this option, SBP BSC now plans
to further expand it to all prize
money amounts during the next fiscal
year. Additionally, multiple new SOPs
were put in place to improve services
at sale/encashment counters. A successful
pilot launch of electronic queue management
system (eQMS) was conducted at North
Nazimabad Office, Karachi. Based on
the experience of this pilot project,
the system is being replicated in
other Field Offices as well, in a
phased manner.
Though investment
in Premium Prize Bonds is picking
up, however, their issuance only from
the Offices of SBP BSC constrained
their outreach. In a bid to scale
up the sale of these Bonds, SBP BSC
has recently launched a project to
issue them through selected branch
networks of the five large commercial
banks.
Foreign Exchange Operations Department
(FEOD)1 of SBP BSC has continued to
provide support to SBP in implementing
its policy instructions concerning
foreign exchange by meticulously following
the Foreign Exchange Manual and the
policies related to trade, commercial
and private remittances. In FY18,
FEOD also started paying more attention
to monitoring of transactions of foreign
trade and their offsite verification.
Operational efficiency of the Department
has been improved through large-scale
automation and enhanced capacity of
the workforce.
FEOD in a bid to
provide reliable and effective support
to SBP has made an extensive usage
of Web-Based One Customs (WeBOC) data
to identify fake E-forms, duplicate
payments against same or fake import
documents. Further it has made use
of WeBOC and International Transaction
Reporting System (ITRS). This includes
an initiative for discontinuation
of submission of returns by the stakeholders
in physical form. This has enabled
ensuring integrity of the data as
FEOD identified and rectified 38,056
discrepancies in data reported by
banks. Furthermore, it has unearthed
the identity of 161,799 undetected
and unreported Electronic Forms-E
(EFEs) by commercial banks.
FEOD is in the process
of establishing Electronic Data Interchange
(EDI) with Customs Department to further
enhance its capacity to monitor FX
operations relating to trade. As FEOD
is using multiple applications therefore,
a project “Integration of FX
Data Universe” has been conceptualized
for FY19 to ensure greater efficiency
in use of IT-based system support
for the purpose. Its completion will
greatly help the FEOD to improve its
oversight on foreign trade transactions
falling in its domain.
Knowledge Management
(KM) and ERM are two other major initiatives
initiated by SBP BSC for gradual implementation.
While KM is aimed at automating end-to-end
workflows within and across the departments,
ERM will strengthen the risk management
capability at SBP BSC. The work on
KM is likely to be completed during
next financial year; however, the
work in the area of ERM is still at
an initial stage.
FEOD is also entrusted
with the responsibility of making
payment to exporters under various
schemes announced by the Federal and/or
Provincial Governments. During FY18,
it handled around 19 schemes of Federal
as well as Punjab and Sindh Governments
and ensured timely disbursement of
Rs 50 billion as subsidy to the eligible
trade entities as compared to Rs 30
billion in FY17.
More than 19,000
cases of commercial, private and trade
related remittances including remittances
against FE allocation involving an
amount of USD 3.9 billion and exposure
of USD 89.3 million through issuance
of bank guarantees were processed
during FY18. Special attention was
given to identification of duplicate
and fake import documents. Due to
these efforts, USD 12.8 million were
repatriated to Pakistan during FY18,
which were remitted abroad based on
incomplete/incorrect documents as
import payments. Further, complaints
against 19 importers have been lodged
with FIA for their failure to repatriate
USD 10.5 million. Penalty of PKR 102
million has been recovered from importers
for their failure to import goods
within the specified regulatory period.
FEOD also identified more than 400
illegal FX dealers at the behest of
Exchange Policy Department.
1 The policy and market for Foreign
Exchange are dealt with and supervised
by the Exchange Policy and Domestic
Money Market Departments of SBP. BSC
only deals with matter relating to
commercial foreign exchange transactions.
FEOD’s new instructions and
active follow-up led to three-fold
increase in timely reporting of 58,056
cases of export overdues involving
USD 1,225 million by commercial banks
and ensured timely repatriation of
USD 887 million during FY18. This
also helped in filing of 13,420 complaints
by FEOD against exporters for non-realization
of export proceeds amounting to USD
191.6 million to FEA Courts in FY18
as against 1,966 cases amounting to
USD 78 million last year.
The responsibilities
of FEOD relating to realization of
stuck-up export proceeds by delinquent
exporters and other areas managed
by it, are now being actively supported
by FEA forum handling complaints regarding
violation of different sections of
FERA-1947, in general, and Section
12(1), in particular. Three new Adjudication
forums were established this year
at Lahore, Quetta and Rawalpindi and
the SOPs for recovery were revamped
resulting in a record realization
of export proceeds of USD 133.7 million
during FY18 as against USD 78.7 in
FY17. During the process, FEAD settled
5,857 complaints in FY18 as compared
to 3,308 last year.
SBP BSC has been
supporting SBP in developing a market-based
inclusive financial system catering
to the financial needs of all segments
of the economy through facilitation
in the implementation of different
policies relating to three priority
areas i.e. SMEs, Agriculture &
Housing Finance, along with SBP’s
initiatives relating to Microfinance
and Islamic Banking.
In the area of Development
Finance during FY18, SBP BSC was entrusted
with the task to launch a five-year
National Financial Literacy Program
(NFLP) to improve the skill set of
the unbanked population in understanding
elementary financial knowledge and
also to persuade them to open Basic
Banking Accounts. The program was
rolled out across 77 districts of
Pakistan through our all Field Offices,
in collaboration with commercial/
microfinance banks and partner institutions
(NGOs, Microfinance Institutions and
Rural Support Programs), with the
aim of reaching 1 million beneficiaries
of which 50% should be women, in five
years. To ensure availability of trainers
in required numbers, SBP BSC, in coordination
with NIBAF and individually, held
21 sessions for the training-of-trainers
in which 382 bankers were coached
as field trainers for conducting NFLP.
Up to 30th June 2018, these trainers
conducted 4,270 classroom sessions
in most underserved districts of the
country that were attended by nearly
100,000 individuals, of which nearly
35% were females wherein 47,000 participants
also opened Mobile/Asaan accounts.
In addition SBP BSC rolled out NFLP
Student Ambassador Plan, which engaged
university students to deliver lectures
at NFLP sessions during their summer/winter
vacation.
The SBP BSC also
conducted a number of focus group
sessions and meetings with stakeholders,
bankers and farmers that facilitated
disbursements of Rs 973 billion of
financing to farmers against the target
of Rs 1,001 billion for FY18.
SBP BSC continued
to take various initiatives to ensure
implementation of special schemes
introduced by SBP in terms of which
commercial banks can obtain re-imbursement
of their funds disbursed to eligible
borrowers. SBP BSC Field Offices have
managed disbursement of an aggregate
amount of Rs 737.7 billion under the
Export Finance Scheme (EFS). SBP has
authorized SBP BSC to conduct verification
of refinance loans availed under EFS
and Islamic Export Refinance Scheme
(IERS). During FY18, SBP BSC teams
conducted verification of 12,532 cases
under both EFS and IERS for which
banks availed refinance of around
Rs 560 billion in total; Rs
466.4 billion and Rs 93.1 billion
for EFS and IERS respectively. The
verification exercise resulted in
the imposition of penalties of Rs
11.7 million on delinquent banks.
SBP has also initiated
various credit enhancement schemes
which have been implemented by SBP
BSC since their inception. During
FY18, SBP BSC issued guarantees to
banks against financing of Rs 6.8
billion extended by them to different
eligible borrowers belonging to 60
different sectors in order to support
broad based financial growth. Further,
subsidies amounting to Rs 844 million
were
processed for onward submission to
Finance Division, GoP, under the Prime
Minister’s Youth Business Loan
(PMYBL) Program to promote young entrepreneurs
and capitalize on Pakistan's young
population demographics.
In order to properly
disseminate policy initiatives of
SBP and ensure their proper implementation
by the financial sector, SBP BSC Field
Offices conducted 89 focus group meetings
pertaining to SMEs (20), Agri. Finance
(17), Microfinance (19), Islamic Banking
(17), Housing Finance (11), Islamic
SME Finance (1) and Joint sessions
(4). Apart from these usual interactive
sessions, the SBP Governor also launched
concessionary refinance and credit
guarantee schemes for women entrepreneurs
in remote and underserved areas.
At the inception
of SBP BSC in 2001, its overall workforce
was around 6,000, which has been reduced
by around 54% as on end June 2018,
thus posing a major challenge to meet
the expectations of stakeholders,
especially in view of increased workload
in the organization.
Therefore, the Human Resources Management
Department (HRMD) has to undertake
a massive hiring drive while ensuring
compliance to the statutory quota
requirements. These measures such
as hiring of Young Professionals Induction
Program for OG-2, and Officers Training
Program for OG-1 batches enabled the
induction of quality HR to meet the
needs as assessed under a workload
analysis conducted by an external
consultant. In addition to direct
hirings, HRMD also inducted specialized
professionals in the areas of Security,
Procurement and Engineering.
Many automation projects
such as implementation of Biometric
and Access Control System (BACES)
and Executive Letter Management System
(ELMS) at HOK were completed with
the future goal of its implementation
at all Field Offices in FY19 and onwards.
A Performance Management System was
implemented on Cash-Side officials
to provide them equal career progression
opportunities and ensure a seamless
merger of Cash and General side. During
FY18, Charter of Demand (CoD) with
the Collective Bargaining Agent (CBA)
for two years was concluded.
Training presents
a prime opportunity to expand the
knowledge base of employees while
ensuring their personal growth in
line with the business needs of the
Bank. 3,444 participants were provided
training at NIBAF and other prestigious
institutes including IBA-Karachi,
LUMS-Lahore,
PSTD-Karachi, IBP during FY18. Twenty-eight
officers were sent for foreign training,
exposure visits and participation
in seminars. SBP BSC has taken initiatives
for e-learning through NIBAF e-learning
Portal and in-house (LAMS), through
which officers can enrich their knowledge
in the areas of soft skills and specific
functions. Taking a step towards self-improvement
of employees in an automated way,
an e-learning portal was also launched
by NIBAF on test-basis, through which
employees will be able to access and
complete 300 different courses of
soft and IT skills. Earlier,
SBP BSC had also designed its own
e-learning module (LAMS) using expertise
of its own officers. Under this program,
285 officers registered themselves
for appearing in examination process.
The dynamic nature
of business at SBP and its subsidiaries
demand provisions of continuous support
and efficient services. General Services
Department (GSD), Engineering Department
and Internal Bank Security Department
(IBSD) have ensured provision of common
support services to SBP and its subsidiaries
in a smooth and efficient manner.
GSD has played a pivotal role in facilitating
various departments in their procurement
as per budgeted targets by offering
services for procurement of goods
and services in compliance with Public
Procurement Regulatory Authority (PPRA)
criteria. Lead-time in procurement
has been reduced by rationalizing
work processes and optimizing the
use of technology. Moreover, the provision
of Healthcare to eligible employees
of SBP, SBP BSC and NIBAF remained
one of the main services provided
by GSD. The current year witnessed
the use of various initiatives like
online appointments and facility of
medical team e-mail group. Similarly,
the services provided by the printing
press under GSD
remained of top quality whether it
be a regular bulletin like “State
Bank News” or different flagship
publications of SBP and SBP BSC.
Considering the prevailing
security situation and associated
challenges, the role of IBSD has gained
prominence in ensuring safe, secure
and conducive work environment for
the employees of SBP, SBP BSC, DPC
and NIBAF. This year saw various initiatives
like conducting regular Physical Efficiency
Tests (PET) of guards and training
of personnel for managing varying
level of security threats to the organization.
Establishment of fully equipped Quick
Response Force (QRF) from available
guards and increased coordination
with external agencies are on the
cards for the upcoming year to further
fortify the security of the stakeholders.
The development of security personnel
and staff is an ongoing feature exercised
by IBSD by keeping itself abreast
with the upcoming security challenges.
Engineering Department
has rendered common services to improve
the physical environment of various
buildings and departments of SBP and
its subsidiaries. During the outgoing
year, various upgradations relating
to electrical, telecommunication,
civil and HVAC systems were carried
out in different buildings across
Pakistan as also campus of NIBAF,
Islamabad including limited residential
facilities. Moreover, architectural
designs for new office buildings at
Islamabad, Gujranwala and female hostel
in Karachi were approved from the
relevant authorities. In the year
ahead, the Department has planned
to work on electronic platform for
improvement of its procurement activities
through e-Procurement System. Another
initiative that will yield its benefit
in coming years is formulation of
Standard Operating Procedures (SOPs)
for different engineering works and
related activities.
During FY18, Internal
Audit Department (IAD) conducted 87
audits as per its annual program or
through its Hub. An important audit
exercise started by IAD relates to
Thematic Audit, and during the year
the Department conducted 15 thematic
audits and its scope was broadened
to the areas of development finance
and foreign exchange operations. The
IAD intends to include Banking and
Currency operations for Thematic Audit
in FY19. Capacity of Internal Monitoring
Units (IMUs) at Field Offices was
also enhanced by arranging trainings,
audit conferences through holding
of meetings of Audit Forum, which
were attended by all audit officers
and select officials of IMUs.
IAD has played a
crucial part in establishing a strong
introspective culture by performing
independent and objective assessment
of organization-wide risk management
and governance practices. The successful
rollout of Quality Assurance and Improvement
Program and implementation of Audit
Management Software (AMS) has further
enhanced the quality of internal controls
in the outgoing year.
A detailed peer review
of IAD’s practices, in collaboration
with Internal Audit and Compliance
Department (IACD) of SBP, against
prescribed standards of Institute
of Internal Auditing (IAA) is in planning
phase. Realizing the crucial role
of technology in SBP BSC’s operations,
IAD is exploring the concept of “Technology
Risk Assessment” to further
re-inforce the organization’s
internal control mechanism. Going
forward, the alignment of IAD’s
Control and Risk Rating System (CRRS)
framework with the Risk and Control
Self-Assessment (RCSA) framework of
Enterprise Risk Management (ERM) will
be very beneficial for the organization.
SBP BSC has also
been undertaking various initiatives
as a part of its Corporate Social
Responsibility (CSR). On an annual
basis, summer/winter internship programs
were offered to students of major
universities across Pakistan at Head
Office in Karachi and all the Field
Offices. Various sports and recreational
activities were arranged for the employees
of SBP, SBP BSC and NIBAF. Sports
tournaments including cricket, football,
badminton and table tennis were conducted
in FY18.
It may be added here that despite
SBP BSC’s significant successes
in the outgoing year, we are not oblivious
to the need for pursuing excellence.
We are keeping a close eye on the
market trends and evolving needs of
the stakeholders and aim to further
automate different processes at SBP
BSC. We are committed to providing
intelligent solutions to dynamic business
requirements. To achieve this, we
will continue to plan and invest in
innovation and governance as well
as try to keep ourselves ahead of
the curve.
The accomplishments
presented in this report would not
have been possible without the commitment
and unwavering efforts of the management
of SBP, its officers as also members
of our unionized and non-unionized
work force. I would like to thank
all of them for their dedication and
commitment towards achievement of
strategic objectives of the organization.
I acknowledge with deep appreciation
the continuous support and guidance
extended by SBP BSC Board, Human Resources,
Security Review and Audit Committees,
Governor State Bank of Pakistan, FRM,
DFG, Operations and BPRG, to enable
us to achieve our strategic objectives.
I am confident that
with the support of all our stakeholders,
the Corporation will continue to prosper
and achieve greater heights in the
times to come.
QASIM NAWAZ
Managing Director
SBP Banking Services Corporation