Pretty soon, at least in Pakistan, you won’t be able to hear the jingle of money, at least figuratively speaking. After remaining in circulation for 50 years, decimal coins will soon be seen only in museums by future generations, as a parliamentary panel has approved amendments in the laws for recycling of the leftover Rs22 million worth old coins.
The National Assembly Standing Committee on Finance and Revenue on Thursday unanimously approved the Pakistan Coinage Amendment Act 2011. The bill will now be tabled in the senate for approval before it goes back to the lower house of parliament for final vote. After this process, decimal coins will cease to exist and Pakistani Re1 will be the smallest currency unit.
Unlike the case in western and European countries, the coins have lost value with the passage of time due to skyrocketing inflation in Pakistan. The decimal coins are no longer in use except in official notebooks.
Many see the issuance of Rs5,000 denomination currency note as one of the factors that led to the loss of small currency value. Former President National Bank of Pakistan Syed Ali Raza once said that Rs5,000 value currency notes made the smaller currency notes of lesser value. The committee members also said that the government should withdraw Rs5,000 denomination currency note as it has affected the currency value.
“The coinage law is outdated and has become obsolete and requires major changes,” said Secretary Finance Dr Waqar Masood.
Currently Pakistan’s currency is being managed through Pakistan Coinage Act 1906. This act was amended in 1961 when the penny ceased to exist as the smallest currency unit and the decimal coin substituted it, said Deputy Governor State Bank of Pakistan Dr Kamran Shahzad. He said at that time the government had issued Rs637 million worth decimal coins and currently the central bank owns slightly over Rs22 million worth of old coins.
The Standing Committee recommended that 1% of each coin denomination should be preserved for the future generations. It also suggested the central bank to auction these coins. Dr Shahzad said that gold and silver coins will still be issued at historical occasions and will continue as legal tender in payments. In 1976, the government had issued a gold coin in Rs3,000 denomination to commemorate the conservation of Astor Markhor. In 1977, to commemorate the Islamic Summit Conference the government also issued a gold coin in Rs1,000 denominations.
The NA panel also raised the issue of substandard quality of currency notes and asked the central bank to ensure that Pakistan Security Printing Press uses better quality paper.
Formation of sub-committee to investigate high interest rates:
The Committee chairperson Fauzia Wahab also constituted a sub-panel to investigate complains about financial mismanagement in the National Bank of Pakistan and abnormal interest rates being charged by commercial banks. It will also look into the issue of alleged violations of human rights in recruitment process. The committee will be headed Riaz Fatayana and will comprise of Kashmala Tariq, Nazar Ghondal, Aftab Shaban Merani and Rashid Godel.
Published in The Express Tribune, August 19th, 2011.