KARACHI, Dec 28: Pakistani currency notes of 100 and 50 denominations are going into Afghanistan unhindered, and in millions everyday, creating an acute shortage in the local market.

Individual account holders, business corporations, trade organisations and big institutions are complaining that their banks are not giving them currency notes of Rs100 and Rs50 denominations. There was a virtual uproar earlier this month when banks could not oblige their account holders, and business organizations suffered many difficulties in paying salaries to their low-wage employees.

Bankers now confide that Afghanistan was sucking in huge quantity of Pakistani currency notes of Rs100 and Rs50 every day. In return dollars are coming in from Afghanistan in Peshawar, Quetta and Chamman at rates, which are much lower than in kerb and in inter-bank. Deployment of the US-led coalition forces and a large number of Western countries based NGOs in Kabul and other areas of Afghanistan are the conduits of greenbacks. Afghanistan has virtually no capacity to absorb this foreign capital and it is finding way to Pakistan.

All this two-way currency flow between Afghanistan and Pakistan goes on despite custom check posts and heavy presence of law enforcing agencies on the international borders in NWFP and Balochistan. According to a rule of State Bank of Pakistan, any Pakistani going abroad cannot carry more than Rs2,000 in local currency.

Enquiries made with the bankers revealed that the phenomenon of two-way currency flow between Pakistan and Afghanistan has come into knowledge of the State Bank of Pakistan.

Since this two-way currency flow is being found advantageous to Pakistan, the authorities have preferred to look other way. Not only that State Bank is overlooking this two way transfer of currency, bankers say that the central bank is taking care of Afghanistan’s demand for Pakistani currency notes in its indenting placed for next year 2003 with the Security Printing Press Corporation. Bankers are at loss as to how much assessment of extra demand for currency has been made and on what basis.

“There will be no such problem of shortage of these currency notes after few weeks,” a senior executive of a local nationalised bank confidently said. Bankers say that it is strictly an unofficial business because Afghan government has recently issued a new Afghani currency.

On Saturday Kalia reported exchange value of one new afghani equal to one Pakistani rupee. “Afghani has shown appreciation in exchange value in last two weeks,” an employee of Kalia company informed Dawn by telephone. Bankers attribute this rise in afghani value to rising outflow of Pakistani currency in Afghanistan.

But banks are still reluctant, for about last one month, to oblige their clients, on their demand to get their cheques cashed in Rs100 and Rs50 notes.

“We have placed orders for 1,100 bundles of Rs100 and Rs50 notes with the State Bank of Pakistan,” a senior officer in Cash Department of National Bank of Pakistan informed Dawn by telephone on Saturday. The National Bank has to distribute salaries to Rangers and employees of other government agencies working in Karachi.

Every bundle of currency notes has ten packets each and every packet has 100 currency notes. It means every packet of Rs100 is worth Rs10,000 and that of Rs50 is worth Rs5,000. A bundle of ten packets of Rs100 currency notes is worth one lakh rupees and that of Rs50 is Rs50,000.

Normally, the NBP distribute 300 bundles of Rs100 and Rs50 currency notes in a day in Karachi. It is worth about Rs20 to Rs25 million every day. On salary payment days—the last days and beginning days of every month—the demand for Rs100 and Rs50 notes increases three or four times. But there is no shortage of these currency notes as the banks also receive these notes from their clients by way of payment for deposits and other services.

But for the last more than two months the currency notes of Rs100 and Rs50 denomination “just started vanishing from the market” to quote a senior banker. It came into notice of bankers early December when many companies and corporation complained that they faced problems in disbursement of salaries to their staff because the banks did not give them Rs100 and Rs50 currency notes.

Bankers say that meetings have been held with the executives of the SBP Banking Services Corporation and matter was brought to the notice of the government. But no banker is ready to quantify the amount of outflow of Pakistani currency and inflow of dollars from Afghanistan. “All this business is undocumented” a banker pointed out. Bankers say that this business gained momentum about two or three months ago incidentally just before or after general elections in Pakistan.

“Why can’t this business be documented and regularised through off-shore banking channels,” is a question that this correspondent raised with the bankers. Bankers say that the governor of SBP Dr. Ishrat Hussain discussed this possibility of off-shore banking in Kabul in a meeting held recently in Peshawar. But no result has come from that meeting.

Currency dealings and business in Peshawar, Chamman and Quetta is different than in other parts of the country. So much so that even the licensed money changers are reluctant to open their offices in these border cities. “It is entirely a different world over there,” a senior executive of a money exchange company, who obtained licence recently, told Dawn. He said that his company carried out a survey of Peshawar to consider opening a branch over there. “But we have decided to keep Peshawar outside our business circle for some time,” he said.

Businessmen who frequent Kabul, Jalalabad and Kandahar confirm of Pakistani currency notes being used in Afghanistan markets. “Petrol pumps and departmental stores prefer to receive payment either in Pakistani currency or in dollars,” a senior executive of a local company, who arrived from Kabul this week informed Dawn by telephone on Saturday.

He said most of the shops and petrol pumps quote the prices in Pakistani currency and taxi drivers, many of them using yellow cabs, are too happy to receive payment in Pakistani currency notes.