There are some factors in our society which really reduces the lives of currency notes in Pakistan

Sep 20 - 26, 2004

With the modernization of banking system, attention is also being paid for circulation of fresh and clean currency notes in Pakistan. As a result of on going campaign of Central Bank to eliminate the foiled currency notes, almost 70% dilapidated currency notes have already been screen out of the circulation. According to plan, no worn out or dilapidated currency note would be accepted after the expiry of the deadline set for December 31, 2004. Credit goes to ATM and Note Counting Machines (NCM) used by the commercial banks, which have virtually scrapped out currency notes of billions of rupees which are not hard enough to be processed by the machines.

"We have imposed several rules on all banks in the country in order to remove dilapidated currency notes from the circulation, which include ban on use of stapler machines, using hand writing for calculation purposes," said Liaqat Durrani, Managing Director State Bank of Pakistan, Banking Services Corporation, he also said that about 16 teams of SBP remains active, raiding bank branches to find out if there is any violation. He said that in order to provide fresh currency notes in the country, the SBP is now spending 25% extra amount for production and printing of Pakistani currency notes, which has now touched to two billion rupees per year from Rs. 1.75 billion which was in 2001. The volume of replacing currency notes are gradually lowering but replacing process would continue nonstop due to the damage to the currency notes by various factors, which include our culture and weather, he added.

He said that there are some factors in our society which really reduces the lives of currency notes in Pakistan. Weather stands on top of that, as currency note paper is of total cotton-based therefore the notes are very absorbents. One can imagine that the life of Rs. 5 and Rs. 10 is only five months while in summer season that reduces to only three months. Apart from weather, culture is the second important factor which reduces the currency notes life. Only 10 percent of the population keeps the currency notes in straight shape in wallet while others give many folds to the currency notes and keep in about a dozen improper places including, female folk keeps in ruppatta, villagers hide it in pocket. There are more improper handling of currency notes for e.g. the circulation in small trades like, milk, vegetable, meat and pan shops. Poultry shops and other grocery shops. If a currency note goes three to four times to a pan shop or a milkman, the note ends its life. Stapler machine is also a killer of currency notes. But now that is going towards an end because this practice is only done in bank branches which are being monitored. However, the government of Pakistan tried to put a complete ban of use of currency notes for garlands, which are used in marriage ceremonies. In this process a currency note is stapled from three to five places at once in order to give it a flower shape. The government could not impose the ban as it was strongly opposed by some political leaders pleading that using currency note garlands in marriage ceremonies is the conventional ritual of our culture.

Mr. Durrani said that Rs 560 billion Pakistani currency notes of different denominations are in circulation all over the world. The volume of five rupees denomination currency notes is 25% of the total volume. 25% volume comprises of Rs 500 note and Rs. 1,000 denomination while the remaining 50 percent volume of total currency notes comprises of Rs. 10/ Rs. 50/ and Rs. 100/. It is very difficult to ascertain that where the currency notes are in circulation. He further said that there are total 237 points in country for the delivery of fresh currency notes and collecting rejected notes. That includes 16 stations of State Bank of Pakistan and 220 of National Bank of Pakistan. Durrani said that State Bank of Pakistan is now on a project to give a varnish coating to the notes of Rs. 10 denomination which are in large number of circulation at the lower level and also are in very venerable situation. From 1st of July 2005, Rs. 5 denomination currency notes would not be in circulation in the country as its legal tender will end replacing coins of Rs. 5 denomination. Later, there is a plan of issuing coin of Rs. 10 but that is under a survey process. However, according to international standard there is a need of issuance of coins from Rs. 1 to Rs. 50 denominations. The denominations blow Rs. 100 currency notes are not in use of ATM machines, he added.


This would be really surprising for many people that production and printing of all Pakistani currency notes is 100% based on cotton. But the note gives the look as if it is made with a specified paper. Used cloths, waste cotton and a waste cloth collected from tailors are the basic raw material for currency notes. This material is sorted out and cleaned for the first step of preparing a thick pulp. After cleaning the raw material, the pulp than goes into a steel boiler where about seven tons of cotton is boiled for six hours at 165 degree centigrade temperature. After that it is ready to go under bleaching process where all sort of colors are washed away and the cotton takes the shape of brilliant white color. Ready pulp goes on to an iron net for watermark process and a security thread is included into the pulp. At this stage pulp is 99% in liquid shape in which there is 90% water. Later pulp goes into different check-processes and to a dryer room. Now this material is given a jelly of glue liquid before wrapping it onto a roller. It goes through many other processes including offset printing, for printing of Rs. 5 denomination notes 40 plates are used. Others are printed with 36 plates. For the printing of Rs. 1,000 and price bonds of Rs. 40,000 denomination take ultra violet ink. Some price bonds of higher denomination are printed on a paper imported from France.