In a significant regulatory decision underscoring the State Bank of Pakistan’s continued push for stronger currency security and compliance controls, the central bank has imposed nearly Rs1.5 billion in penalties on the National Bank of Pakistan after counterfeit banknotes were discovered during inspection and verification exercises. The move reflects a tough stance by the banking regulator on lapses in currency handling, fraud prevention, and operational oversight within the financial system.
According to official documentation, the penalties comprise two major fines: Rs200 million and an additional Rs1.276 billion, both linked to the discovery of fake banknotes in NBP’s custody. The inspection findings pointed to counterfeit currency being detected in the bank’s operational process, triggering regulatory action under SBP’s enhanced enforcement framework. The penalties are among the most substantial compliance-related actions taken against a state-owned lender in recent years.
The National Bank of Pakistan confirmed the development, noting that it operates as custodian of the central bank’s currency chest operations. In its clarification, NBP stated that the financial liability for counterfeit notes discovered through the regulatory audit will ultimately be passed to the depositing banks responsible for submitting the currency. The institution indicated that liens have already been applied to the respective banks’ deposit accounts to cover the exposure, a procedural mechanism used to safeguard the financial impact of fraudulent or erroneous currency deposits.
NBP also highlighted that the matter has been formally elevated to SBP and remains under review, signaling ongoing discussions between the regulator and the state-owned bank regarding operational controls, currency sorting responsibilities, and risk mitigation obligations under the central bank’s currency management framework. The bank’s statement suggests attempts to resolve aspects of liability attribution and procedural accountability with the regulator.
In a related regulatory update, SBP has also levied an additional Rs56.52 million in financial penalties on NBP over the nine-month period ending September 30, 2025. This compares with Rs36.39 million in fines during the same period a year earlier, indicating a sharper scrutiny on operational and compliance practices at the institution. The cumulative penalty trend reflects a broader tightening of enforcement across Pakistan’s banking system, where adherence to regulatory controls, risk systems, and fraud detection protocols has come under increasing focus.
Industry analysts note that Pakistan’s financial regulator has been progressively strengthening its oversight architecture, especially around currency circulation integrity, anti-money laundering compliance, and fraud prevention. The substantial penalty serves as a reminder to institutions about the accountability attached to currency chest management, verification processes, and internal compliance discipline.
As the country’s digital payments ecosystem expands and currency handling continues to evolve, banking experts say robust operational controls and enhanced technology-based detection systems will play a crucial role in safeguarding confidence in the financial system. The latest enforcement action by SBP reinforces expectations that banks must rigorously adhere to compliance standards, deploy modern risk frameworks, and maintain strict supervision in currency operations to protect the integrity of the financial network.
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