SBP mulls discontinuing Rs10 note over rising production cost

The State Bank of Pakistan (SBP) is considering discontinuing the Rs10 banknote amid rising production costs, a senior central bank official told a Senate committee on Tuesday. SBP Deputy Governor Dr Inayat Hussain disclosed the development in a meeting of the Senate Standing Committee on Finance and Revenue. The committee reviewed matters relating to currency security, the Pakistan Remittance Initiative (PRI), protection of foreign investments and concerns regarding fraudulent practices by companies. SBP deputy governor revealed during the meeting that the central bank had proposed to discontinue Rs10 note and denomination could take place after introduction of new currency notes. “The committee was informed that approximately one year would be required to introduce the new notes into circulation, while the printing cost of a Rs5, 000 note was approximately Rs14, ” a statement from the Senate Secretariat read. As per the statement, the committee chairman Senator Saleem Mandviwalla raised the issue of three Rs5, 000 currency notes submitted to the SBP for verification nearly two years ago, for which response of the State Bank was awaited. The SBP deputy governor informed the committee that the existing Rs5, 000 note was introduced in 2005 and that advancements in technology had made counterfeiting easier. He stated that a tender had been advertised for designing a new note. “Four bidders participated in the process and the contract was awarded to a consultant firm, which was currently incorporating the required changes. The design would subsequently require approval of the federal government. “The chairman directed the State Bank to provide complete details of the bidding process and expressed concern over the circulation of counterfeit currency. ” During the meeting, Senator Anusha Rahman Ahmad Khan emphasised the need to streamline the approval process for currency designs to avoid repeated referrals for minor amendments and unnecessary delays. Pakistan Remittance Initiative Meanwhile, SBP governor briefed the committee on the Pakistan Remittance Initiative (PRI), stating that the government had initially provided subsidies to banks to facilitate remittances by overseas Pakistanis, according to the Senate Secretariat statement. He informed the committee that Rs120 billion had been provided as subsidy, which was curtailed during the previous year. “Due to prevailing fiscal constraints, the government was unable to continue the subsidy under the current budget. The banks had therefore decided to bear the associated costs from their own resources to ensure continued facilitation of remittances. ” The committee appreciated the initiative and decided to invite selected banks at its next meeting to brief it on their performance and contribution to the remittance sector. Investments, deposits of foreign investors The committee also reviewed the F. E. Circular, 1999, concerning the protection of investments and deposits of foreign investors in Pakistan. SBP deputy governor informed the committee that the instructions had been communicated to the concerned banks at that time for protection of the amount of foreign investors and, according to the State Bank’s record, no such case remained pending with the bank. “The committee, however, expressed concern over reports of certain cases of foreign investors still being pending and sought a detailed statement of such cases, if any, including their status and reasons for pendency. “Senator Talal Mehmood expressed concern over companies operating in Pakistan that, despite reporting losses, may allegedly engage in fraudulent practices and mislead their investors and shareholders regarding their financial position. He observed that some companies may ultimately collapse or leave the country, causing financial losses to shareholders and the general public. He urged the government and relevant regulatory authorities to scrutinise such companies and take timely action against fraudulent practices to safeguard the investments and hard-earned money of the public, ” the statement read.

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