From the pre-partition times, the currency used in the areas which became Pakistan after the secession from India (British India) has always been Rupee. Historically, the first currency called “rupee” was introduced in the 16th century by Sher Shah Suri, founder of the Sur Empire. The term is from rūpya-, a Sanskrit term for silver coin.
The first versions of Pakistan rupee notes issued in 1947 were actually British Indian rupee notes that had been imprinted with the word “Pakistan” to differentiate them from India’s national currency. The State Bank of Pakistan was formed shortly thereafter, and began to mint its own currency.
Prior to being converted to a decimal-based currency system in 1961, the rupee was divided into 16 annas, and each anna was subdivided into 4 paise. The decimal conversion divided the rupee directly in 100 paise, rendering the “anna” denomination obsolete.
The smallest note has always been 1 Rupee issued by the “Government of Pakistan”. 1 Rupee notes have always been issued by the “Government of Pakistan” under the signature of Minister of Finance. The largest note has been 5,000 Rupees introduced in 2006, which unfortunately was higher than the minimum wage of the country till 2008 and in 2008 the minimum wages were revised to 6,000 Rupees per month. This is a very sad reality to this note in my opinion.
In 1947, provisional issues of banknotes were made, consisting of Government of India and Reserve Bank of India notes for 1, 2, 5, 10 and 100 rupees overprinted with the text “Government of Pakistan” in English and Urdu. Regular government issues commenced in 1948 in denominations of 1, 5, 10 and 100 rupees. The government continued to issue 1 rupee notes until the 1980s but other note issuing was taken over by the State Bank in 1953, when 2, 5, 10 and 100 rupees notes were issued. Only a few 2 rupees notes were issued. 50 rupees notes were added in 1957, with 2 rupees notes reintroduced in 1985. In 1986, 500 rupees notes were introduced, followed by 1000 rupees the next year. 2 and 5 rupees notes were replaced by coins in 1998 and 2002. 20 rupee notes were added in 2005, followed by 5000 rupees in 2006.
All banknotes other than the 1 and 2 rupees feature a portrait of Muhammad Ali Jinnah on the obverse along with writing in Urdu. The reverses of the banknotes vary in design and have English text. The only Urdu text found on the reverse is the Urdu translation of the Prophetic Hadith, “Seeking honest livelihood is worship of God.” which is حصول رزق حلال عبادت ہے (Hasool-e-Rizq-e-Halal Ibaadat hai).
* some paragraphs have been extracted from Wikipedia.