The State Bank of Pakistan (SBP) (Urdu: ) is the central bank of Pakistan.

n. 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.

[edit] History
Before independence on 14 August 1947, during British colonial regime the Reserve Bank of India was the central bank for both India and Pakistan. On 30 December 1948 the British Government's commission distributed the Reserve 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

Muhammad Ali Jinnah, the founder of Pakistan, making a speech at the opening of the State Bank of Pakistan. 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 countrys 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: 1) 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. 2) 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.

ORGANIZATION: The organization of the Department is spread over the following Divisions: 1 Agricultural Credit Estimation & Target Monitoring Division 2 Agriculture & Rural Finance Policy Division 3 PSCAC Secretariat/ Coordination & Services Division Brief functions of each Division are as under:

I. Agricultural Credit Estimation & Target Monitoring Division

Agricultural credit estimation/ assessment in consultation with stakeholders. Allocation of indicative agricultural credit targets to banks. Periodical monitoring of agricultural credit targets. Undertaking all functions relating to ACAC. Follow-up for implementation of ACAC decisions.

Monitoring Credit lines to PPCBL & Zarai Taraqiati Bank Ltd. Managing the claims of bonafide losses of five big commercial banks. Collection of periodical agri. finance data from banks and its dissemination. Responding to Senate/ National / Provincial Assembly questions. Preparation of reviews/ write-ups on agri. credit for various publications.

II. Agriculture & Rural Finance Policy Division

Reviewing agri/ rural finance in terms of issues/ challenges faced, developments taking place in agriculture/ rural finance both in the country and elsewhere, developing an adequate knowledge and information base for policy formulation, etc. Introducing new products, schemes, guidelines in agri/ rural finance in consultation with banks and stakeholders to catalyze growth and activity in the sector. Providing guidance to banks in understanding agri/ rural finance policies/ issues/ PRs of SBP, etc. Formulation of agriculture & rural finance policies in consultation with stakeholders. Coordination with Federal and Provincial Government departments on agriculture finance policies and issues. Reviewing/ amending existing agri/ rural finance policies, instructions and Prudential Regulations, etc. based on new developments and feedback from stakeholders. Organizing periodical meetings with agri. heads to discuss their performance and issues being faced in agriculture finance. Acting as an executing agency for SBP component of Agribusiness Finance Development Project of ADB. Managing developmental projects of the department in collaboration with other divisions/ units/ departments.

III. PSCAC Secretariat/ Coordination & Services Division Coordination with stakeholders and formulation of working groups/ committees for making recommendations to increase the flow of credit to various sectors of the economy. Preparing working papers for the PSCAC meetings. Conducting the meetings. Preparation of minutes and follow-up action plans. Implementation of follow-up actions in collaboration with all concerned. Administration, logistics, dispatch and support services for smooth running of the Department. Preparation of Business Plan & Budget for the Department. Initiating and undertaking information dissemination and awareness building programs for farmers and special training programs for commercial banks.