Banks violate SBP rules on printing of cheque books

The depositors are at the risk of being defrauded as “some” of the scheduled banks continue to transgress the central bank’s criteria for printing of cheque books. The State Bank of Pakistan (SBP) has long been critical of the commercial banks for violating the CBS-1 specifications, particularly the usage of paper for printing the cheque books and security stationery that, the central bank believes, lead to its misuse for fraudulent purposes.
There have also been reports that some of the banks have been getting their cheque books printed by unauthorized printers, as the State Bank observed in its BPD Circular No 19, “spurious cheques by unauthorized printers on sub-standard paper”. “It has come to the notice of State Bank of Pakistan that some banks are not following the (relevant) instructions in letter and spirit,” the regulator warned the presidents and chief executives of the scheduled banks through issuing BPRD Circular Letter No. 21 on Thursday. Reiterating the need for a meticulous compliance with the relevant rules, the SBP warned the non-compliant banks of penal action under the applicable rules. “Non Compliance and circumvention of instructions shall be dealt with penal action under relevant provisions of Banking Companies Ordinance 1962,” the bank said. Some eight years back on June 25, 2003, the central bank had to issue BPD Circular No 19 after noticing certain banks did not follow its rules regarding the printing of cheque books. “Instances have been noted during the recent past that paper used in printing of cheque books and security stationery do not conform to CBS-1 specifications,” the bank circular said.
Banks to observe technical specifications
Aimed at protecting the interest of the depositors and general public and to avoid, what the bank said, printing of spurious cheques by unauthorised printers on sub-standard paper, the State Bank had then decided that the banks shall observe the following technical specifications while printing the cheque books. The cheque books and security stationery shall be printed on CBS-1 paper which must conform to International Standards and CBS-1 specifications to have protection against alteration and fraudulent attacks on the vulnerable parts of the cheques by having chemical sensitivity to the chemicals like Oxalic Acid (5 per cent), Sulphuric Acid (2.5 per cent), Hydrochloric Acid (2N), Sodium Hydroxide (5 per cent), Calcium Hypochlorite, Peliken Eradicator, Toluene, Ethanol (Alcohol), Benzene, Petrol, Phenol, Oxitol, Petroleum Ether, Acetone, French Corrector, Acetic Acid, Trichloroethylene, Carbon Tetra Chloride, Chloroform and Butyl Acetate.
The paper of cheque books and other security stationery if printed by licensed Security Printing Agencies (other than Pakistan Security Printing Corporation (Pvt) Limited (PSPC) shall require to be tested from PSPC, before printing of cheque books and other security stationery. The banks shall be required to submit a certificate each year to the effect that all cheque books and security stationery printed conforms to the above specifications to the SBP’s Accounts Department within 15 days from the end of each financial year. The State Bank during its normal course of inspection of the banks shall check the compliance of specifications and report of the laboratory tests, where applicable. The central bank shall also on a sample basis carry out occasional laboratory tests for the cheque books and security stationery to ensure that the same are in conformity with the International Standards and as per the said specifications. But, the banks still appear to continue violating the SBP rules that compelled the regulator to issue a new circular on Thursday and reminding the non-compliant banks of its prior circulars as “Please refer to BPD Circular No.19 dated June 25, 2003 in terms of which standard of printing of cheques was prescribed,” the state bank asked the bank executives Thursday.