MUHAMMAD ALI SATTI

TOPIC: STATE BANK/ CENTRAL BANK

Definition:

‘’ a Central bank chartered by and operating under the laws of a state’’

It is a monetary institution, which fully controls the production, circulation, and the supply of money
in the market, seeking to regulate the member banks and stabilize a nation’s economy and national
currency.

A central bank has no direct interaction with the general public. Indeed, it functions as a banker
to the other banks of the country such as commercial banks, cooperative banks, development
banks, rural banks ETC. Further, the central bank also acts as a guide to them, by providing
the necessary guidance, when they require support.

OBJECTIVES:
1. To maintain interest rates
2. To maintain a stable exchange rate
3. Ensure price stability
4. Promote economic growth
5. Promote financial institutions

• FUNCTIONS:

1. MONETARY AUTHORITY:

Formulate, execute and monitor the country’s monetary policy.

2. ISSUE MONEY:
Issue notes and coins.

3. BANKER TO GOVERNMENT:

A central bank keeps a track of government transactions such and advises the government on
various matters related to monetary and credit policies.
4. CUSTODIAN OF FOREIGN RESERVES:

The central bank plays the role of a custodian, for safeguarding foreign currency, gold and
other securities.
5. BANKER TO BANKS:

Provide money/ loans to commercial banks in times of emergency or crisis.

6. CREDIT CONTROLLER:

Regulates the flow of credit, as per the needs of the economy, by using various methods.
 7. TRANSFER OF FUNDS:
Deals with the Settlement of accounts and transfer of funds between other banks.

8. SUPERVISOR:
Supervise the functioning of banks.
9. COLLECTION/ PUBLICATION OF DATA:

Collects, prepare and publish statistical information related to banking.

10. DEVELOPMENT of FINANCIAL INSTITUTIONS:

Develop financial institutions which play important role in industrial and economical growth.

❖ STATE BANK OF PAKISTAN

State Bank of Pakistan or SBP is the central/ state bank of our country,
which is responsible for supervising and regulating the country’s currency
and credit policy.
It also looks after the activities of the banks and financial institution of the
country.

CONCLUSION:
State banks play a crucial role in ensuring economic and financial stability of
any country by acting as an adviser to government, supervising bank activities
and formulating monetary policies.

THANK-YOU!