ISLAMABAD: Members of a Senate committee expressed concern on Friday over what they called an increase in cases involving counterfeit currency notes and indicated that even banks might be issuing such notes.
A senior official of the State Bank of Pakistan (SBP) told a meeting of the Senate Standing Committee on Finance that banks had note-counting machines only and admitted that the problem could be more serious than perceived at present.
The issue was raised by Senator Saleem Mandviwala, the chairman of the committee, when he said: “I have reports that counterfeit notes were recently in wide circulation at the cattle market in Karachi, possibly because banknotes change hands speedily at such places.”
His statement was supported by Senator Kamil Ali Agha. “We used to think that this was being done only in Lahore. But this seems to be a nationwide phenomenon,” he said.
He added that he had come across a case in which “even a bank had issued fake currency notes”.
When asked to brief the committee on the matter, SBP’s Deputy Governor Riaz Riazuddin said he himself had expressed concern over the possible circulation of counterfeit banknotes in the country.
But he said that the cash processing system was being improved. “All the banks have been asked to put in place machines for detecting counterfeit notes by January 2017,” he said. “After the deadline no bank will be allowed to process notes without such a machine.”
Mr Riazuddin also said that the SBP had decided to install two such machines by March 2016 and the tender for their procurement had already been issued.
He also said that currently there was no remedy for people who had received counterfeit notes.
At this Finance Secretary Dr Waqar Masood said that any compensation given to those defrauded in this manner could be taken as encouraging suppliers of counterfeit notes which could result in an increase in the supply of such notes.
Mr Riazuddin said the central bank would launch an awareness campaign. It has prepared a documentary about ways of differentiating counterfeit notes from the genuine ones.
Members of the committee said the government’s decision to issue $500 million Eurobonds at a rate of 8.25 per cent was wrong because Pakistan would now be bracketed with countries like Kenya and Zambia in the international bond market.
They said the timing of the issue was flawed. The bonds should not have been launched in haste.
They also asked the SBP officials whether any other country had issued bonds at such a high interest rate.
Officials of the central bank said that some African countries had issued bonds at the same rate. However, they failed to name any country.
Meanwhile, the committee delayed grant of approval to the State Bank of Pakistan Amendment Act Bill.
The amendment calls for depriving the central bank of the authority to formulate the country’s monetary policy, and setting up of a Monetary Policy Committee which will include experts from the private sector and three executive directors of the SBP.
The committee also delayed approval of amendments to the anti-money laundering (AML) bill.
“The fiscal offences as mentioned by the Federal Board of Revenue are all flawed, as the FBR wants that a non-filer of tax returns may be booked under anti-money laundering laws,” Senator Mandviwala said.
“Finance Minister Ishaq Dar must have been aware of consequences of the AML because anyone charged under it will be denied visa by all countries.”
His stance was supported by Senator Ayesha Raza of the PML-N.
The committee has recommended that AML laws should apply to non-payment of tax only on foreign assets. The matter will be taken up again at the next meeting of the committee.
Published in Dawn, October 3rd , 2015
On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play
