Pakistan mulls polymer banknote move to fight forgeries

The State Bank of Pakistan (SBP) has said it will explore a transition to polymer banknotes to help it crack down on a worrying uptick in the number of counterfeit paper banknotes circulating in the market.

The central bank's governor Jameel Ahmed told the Senate committee on banking and finance that a polymer version of one note denomination will be piloted later this year and, If that goes well, the new format will be extended to other denominations, according to local media reports.

In addition, redesigned banknotes in all denominations with beefed-up security features including updated holograms would be issued in December, said Ahmed. Calls to withdraw the largest 5,000 rupee note, which is said to be most prone to fraud and other illicit activities, have so far not been heeded.

The decision appears to signal a reversal of the SBP's earlier position that it had no plan in the near-term to make a switch to polymer notes, which allow for enhanced security features, such as see-through windows and enhanced holograms that make them harder to counterfeit.

Studies suggest they are more cost-effective as they have a much longer lifespan, despite costing more to produce at the outset.

Earlier this year, SBP's finance director Qadir Bakhsh warned of worrying levels of counterfeit notes, mainly in the 1,000 rupee denomination, which had prompted thousands of investigations in the last couple of years. It is estimated that the bulk of counterfeits in circulation – around two-thirds – are 1,000 rupee notes.

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