SBP instructs banks for automated cash management

KARACHI: To modernise the cash management function of banks, the State Bank of Pakistan (SBP) has instructed banks to disburse only authenticated cash to clients / general public from their branches and automated teller machines from January 2, 2017.
For this purpose, the banks would establish ‘Cash Processing Centres (CPC)’ at their cash feeding branches or can make arrangements with other banks / CPCs to get their cash processed, the SBP circular issued Wednesday said.
The comprehensive instructions are part of a strategy to convert the cash management function from manual to automated, and improve the quality of banknotes in circulation.
Moreover, the effective implementation of the instructions is likely to bring efficiency and transparency, and also check counterfeiting of banknotes.
In addition, the SBP has introduced the mechanism of interbank exchange / trading of cash, enabling the banks to exchange cash directly from other banks and SBP Banking Services Corporation (SBP-BSC) window. However, this would be only as last resort to provide cash to the banks in case of shortages and to absorb access cash in case of surpluses in the market.
“With the introduction of this mechanism from January 2, 2017, the existing facility available to banks for deposit of re-issuable banknotes with the offices of SBP-BSC will cease to exist,” the circular mentioned.
Bankers said that the potential mechanism would not impact the forex market, but instead ease cash requirements for banks short of foreign currency notes.
According to the circular, the SBP-BSC offices would accept the surplus cash only as a last resort when this cash could not be placed in the interbank market and that too against a service charge of 0.12 percent of the total value deposited. The SBP-BSC would however continue to accept soiled/unfit banknotes from banks. The transition from the existing arrangement would be managed in an orderly manner.