SBP orders enhancement of security features in cheques

Karachi: The State Bank of Pakistan (SBP) Thursday directed the Presidents/Chief Executives of all scheduled Banks/MFBs to enhance security features in cheques.

It referred to BPD Circular No. 19, dated June 25, 2003 wherein banks were prescribed minimum requirement in relation to the paper used for the printing of security stationary. The objective of said circular was to mitigate risk of frauds perpetrated either through cheque washing or making altogether fake instrument. However, a surge in such instances over the past few years indicates that the paper related security requirements already in place are not sufficient. Consequently, in the interest of general public as well as banks, it has been decided to prescribe additional security features for cheques provided by banks to their account holders.

2. For paper security, banks are required to ensure that all cheques must carry bank’s logo or name as a standardized water mark visible only if the cheque is placed against a light source. The Watermark can be single or multi tone, however no part of Watermark should appear in area specified for Magnetic Ink Character Recognition (MICR) line. Further, the paper used for cheques must contain atleast one Invisible Ultraviolet (UV) security feature such as UV fibers, UV Hi- Lites or any other.

3. The space on the cheque allocated for the amount and name of payee must contain anti forgery ink.

4. In addition to MICR line the name of the account holder should also be printed using the bleed through technology.

5. Banks are advised to acquire pre-shipment verification of CBS-1 paper being imported for the printing of cheques. Besides, banks must ensure that the paper used for the printing of cheques has been granted NOC from Pakistan Security Printing Corporation (PSPC) as per the import policy.

6. Banks/DFIs shall ensure availability of Instant Verification (IV) markers at their cash counters as well as at all clearing units and devise a policy whereby authenticity of cheques drawn for an amount over a specified limit must be subject to verification by IV marker. The limit may be different for cheques being paid over the counter and via clearing.

7. The fraud perpetrated through tempered or fake cheques can be curtailed to a greater extent by improving skills of staff involved in clearing of cheques. It is therefore important that relevant staff is imparted training on the security features and assessing the genuineness of cheques.

8. The standard operating procedures relating to requisition, procurement and transmission of security stationary should be approved by Board of Director. Besides these functions should be subject to comprehensive audit at least once in a year.

9. PBA in consultation with SBP will develop criteria for empanelment of printers eligible for printing of security stationary. After formation of said panel bank/DFIs will get their security stationary printed only from Printers enlisted on PBA panel.

10. The security features prescribed in this circular are by no means exhaustive; banks may incorporate additional security features in their cheques provided to the depositors.

11. The aforesaid instructions will take effect from June 30, 2014. The stock of cheques issued till enactment of these instructions shall however be considered valid.

12. The instructions contained in this circular supplement earlier instruction issued vide BPD Circular No. 19, dated June 25, 2003 and BPD Circular letter No.27 dated September 15, 2003.