Deputy governor of central bank agrees on the need for a study.
The central bank has been approached by certain quarters to discontinue the Rs5,000 denomination currency notes, said State Bank of Pakistan (SBP) Deputy Governor Saeed Ahmad on Thursday.
“Globally, all countries prefer coins over notes due to their longevity and least chances of forgery,” he said while speaking at a meeting of the Public Accounts Committee (PAC).
“Due to these valid points, there is a need to study whether to continue or discontinue the Rs5,000 denomination note.”
PAC member Sheikh Rasheed Ahmad raised the issue of fake Rs5,000 currency notes, saying they were used in illegal activities including the facilitation of carrying large amounts without any fear of detection.
Ahmad said the central bank had also received a similar feedback following which certain quarters had demanded the discontinuation of the banknote. However, he said in a cash economy, there might be difficulties in carrying large amounts for business transactions.
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Different countries are gradually moving towards digital transactions, which help in tracing trails of the money transacted besides curbing its use in anti-state activities.
PAC members advised the government to mint coins instead of heavily focusing on printing notes.
The deputy master mint told PAC that in other countries there were six to eight kinds of currency coins. “The cost of minting a coin is Rs3 but it lasts up to 40 years. In comparison, the cost of printing a Rs100 denomination note is just Rs3.6, but it lasts only from six months to two years.” PAC refused to take briefing from the SBP deputy governor on the recent devaluation of the rupee.
Instead, the committee chairman, Khursheed Shah, called SBP Governor Ashraf Mahmood Wathra for the briefing but he was informed by the finance secretary that Wathra was ill and could not attend the meeting.
PML-N’s Junaid Anwar Chaudhry urged the PAC chairman not to take such excuses lightly which government functionaries usually made to avoid participation in meetings of the parliamentary watchdog.
The other day, officials of Zarai Taraqiati Bank Limited gave a false statement in a meeting of the Senate Standing Committee on Finance, saying the bank president was in a meeting of PAC, when in fact that sitting had ended two hours before the start of standing committee meeting.
HBFC affairs
PAC also questioned the appointment of SBP Deputy Governor Saeed Ahmad as chairman of the board of directors of House Building Finance Company (HBFC).
On Wednesday, HBFC Chief Executive Officer Pervez Said told the Senate Standing Committee on Finance that Ahmad had been appointed chairman of the HBFC board of directors. Finance Secretary Dr Waqar Masood defended the appointment and said there was legal provision in the SBP Act that allowed the federal government to assign any job to the SBP deputy governor.
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“If you think the appointment is wrong, you may amend the law,” said Masood while throwing the ball back in the PAC court.
However, PAC member Naveed Qamar did not accept the government’s justification and insisted that a regulator could not sit on the board of a banking company.
“If the deputy governor takes a wrong decision in his capacity as HBFC chairman, who will question him?” asked Qamar.
He said assigning jobs did not mean that the government should start appointing the regulator on the boards of banks. PAC was also not satisfied with the functioning of HBFC. It asked the government to inject more funds into HBFC aimed at increasing the number of housing loans to poor and lower middle classes of the country.
Published in The Express Tribune, August 28th, 2015.
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