The
State Bank of Pakistan (SBP) (Urdu: بینک دولت پاکستان) is the
central bank of Pakistan
.
While its constitution, as originally laid down in the State Bank
of Pakistan Order 1948, remained basically unchanged until January
1, 1974, when the bank was nationalized, the scope of its functions
was considerably enlarged. The
State Bank of Pakistan Act
1956, with subsequent amendments, forms the basis of its
operations today.
The headquarters are located in the financial
capital of Pakistan, Karachi
with its
second headquarters in the capital, Islamabad
.
History
Before
independence on 14 August 1947, the
Reserve Bank of
India
(Central Bank of India) was the central bank for
what is now Pakistan. On 30 December 1948 the British Government's
commission distributed the Bank of India's reserves between
Pakistan and India
- 30 percent
(750 M gold) for Pakistan and 70 percent for
India.
The losses incurred in the transition to independence were taken
from Pakistan's share (a total of 230 million). In May, 1948
Muhammad Ali Jinnah (Founder of
Pakistan) took steps to establish the State Bank of Pakistan
immediately. These were implemented in June 1948, and the State
Bank of Pakistan commenced operation on July 1, 1948.
FUNCTION
Under the
State Bank of Pakistan
Order 1948, the state bank of Pakistan was charged with the
duty to "regulate the issue of bank
notes and keeping of reserves with a view to securing monetary
stability in Pakistan and
generally to operate the currency and credit system of the country
to its advantage".
A large section of the state bank's duties were widened when the
State Bank of Pakistan
Act 1956 was introduced. It required the state bank to
"regulate the monetary and credit system of Pakistan and to foster
its growth in the best national interest with a view to securing
monetary stability and fuller utilisation of the country’s
productive resources". In February 1994, the State Bank was given
full
autonomy, during the financial sector
reforms.
On January 21, 1997, this autonomy was further strengthened when
the government issued three Amendment Ordinances (which were
approved by the
Parliament in
May 1997). Those included were the State Bank of Pakistan Act,
1956, Banking Companies Ordinance, 1962 and Banks Nationalisation
Act, 1974. These changes gave full and exclusive authority to the
State Bank to regulate the banking sector, to conduct an
independent
monetary policy and to
set limit on government borrowings from the State Bank of Pakistan.
The amendments to the
Banks
Nationalisation Act brought the end of the
Pakistan Banking Council (an
institution established to look after the affairs of NCBs) and
allowed the jobs of the council to be appointed to the Chief
Executives, Boards of the Nationalised Commercial Banks (NCBs) and
Development Finance Institutions (DFIs). The State Bank having a
role in their appointment and removal. The amendments also
increased the autonomy and accountability of the chief executives,
the Boards of Directors of banks and DFIs.
The State Bank of Pakistan also performs both the traditional and
developmental functions to achieve
macroeconomic goals. The traditional
functions, may be classified into two groups:
- The primary functions including issue of notes, regulation and
supervision of the financial system, bankers’ bank, lender of the
last resort, banker to Government, and conduct of monetary
policy.
- The secondary functions including the agency functions like
management of public debt, management of foreign exchange, etc.,
and other functions like advising the government on policy matters
and maintaining close relationships with international financial
institutions.
The non-traditional or promotional functions, performed by the
State Bank include development of
financial framework, institutionalisation of savings and
investment, provision of training facilities to bankers, and
provision of credit to priority sectors. The State Bank also has
been playing an active part in the process of islamisation of the
banking system.
Regulation of liquidity
The State Bank of Pakistan has also been entrusted with the
responsibility to carry out monetary and credit policy in
accordance with
Government
targets for growth and inflation with the recommendations of the
Monetary and
Fiscal
Policies Co-ordination Board without trying to effect the
macroeconomic policy objectives.
The state bank also regulates the volume and the direction of flow
of credit to different uses and sectors, the state bank makes use
of both direct and indirect instruments of monetary management.
During the
1980s, Pakistan embarked
upon a program of financial sector reforms, which lead to a number
of fundamental changes. Due to these changed the conduct of
monetary management which brought about changes to the
administrative controls and quantitative restrictions to market
based monetary management. A reserve money management programme has
been developed, for intermediate target of M2, that would be
achieved by observing the desired path of reserve money - the
operating target.
State Bank of Pakistan has changed the format and designs of many
bank notes which are currently in circulation in Pakistan. These
steps were taken to overcome the problems of fraudulent
activities.
Banking
The State Bank of Pakistan looks into a lot of different ranges of
banking to deal with the changes in economic climate and different
purchasing and buying powers. Here are some of the banking areas
that the state bank looks into;
- State Bank’s Shariah Board Approves Essentials and Model
Agreements for Islamic Modes of Financing
- Procudure For Submitting Claims With Sbp In Respect of
Unclaimed Deposits Surrendered By Banks/Dfis.
- Banking Sector Supervision in Pakistan
- Micro Finance
- Small Medium Enterprises (SMEs)
- Minimum Capital Requirements for Banks
- Remittance Facilities in Pakistan
- Opening of Foreign Currency Accounts with Banks in Pakistan
under new scheme.
- Handbok of Corporate Governance
- Guidelines on Risk Management
- Guidelines on Commercial Paper
- Guidelines on Securitization
- SBP.Scheme for Agricultural Financing
Bank Assets and Liabilities
This is a chart of trend of major assets and liabilities reported
by scheduled commercial banks to the State Bank of Pakistan with
figures in millions of Pakistani Rupees.
[87304][87305][87306]
| Year |
Deposits |
Advances |
Investments |
| 2002 |
1,466,019 |
932,059 |
559,542 |
| 2006 |
2,806,645 |
2,189,368 |
799,285 |
Departments
agriculture credit
- Audit
- Banking Inspection
- Banking Policy & Regulations
- Banking Supervision
- Corporate Services
- Economic Analysis
- Financial Monitoring Unit
- Monetary Policy
- Research
- Statistics and Data Warehouse
- Exchange Policy
- Human Resource
- Information Systems & Technology
- Islamic Banking
- Legal Services
- Library
- Payment System
- Real Time Gross Settlement System (RTGS System)
- Small and Medium Enterprises
- Training and Development Department (TDD)
- Treasury Operations
- Strategic & Corporate Planning
- Microfinance
Governor
The principal officer of the SBP is the
Governor. The
current Governor of State Bank of Pakistan is
Syed Salim Raza who took over from Dr.
Shamshad in January 2009 for a three year term. He is a retired
professional from Citibank and was the Chairman of Pakistan
Business Council.
Central Board of Directors
- Syed Salim Raza Chairman
- The Secretary Finance Member
- Mr. Khair Mohamed Junejo Member
- Mr. Ehsen Rashid
- Mr. M. Yaqoob Vardag Member
- Mr. Mohsin Aziz Member
- Dr. Wasim Azhar Member
- Mr. Kamran Y. Mirza Member
- Mr. Alman A. Aslam Member
- Mr. Riaz Ahmed Secretary
Trivia
- An image of the Islamabad branch appears on the former
five-hundred-Rupee banknote.
See also
References
- State Bank of Pakistan Evolution, Functions and
Organization by M Farooq Arby : State Bank of Pakistan and Central
Bank of pakistan
External links
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