RUBAB FATIMA

BB-21-35
Intro ofSBP
State Bank of Pakistan
Mr. Jameel Ahmad
Governor, State Bank of Pakistan
 INTRODUCTION OF SBP

• The State Bank of Pakistan (SBP) is the central bank of Pakistan, it was
established on July 1, 1948.
• SBP is responsible for regulating the country's monetary and financial
system.
• The State Bank of Pakistan is led by the Governor, chosen by the
President of Pakistan, while the Board of Directors, responsible for
making decisions and shaping policies, oversees its operations.
 CONTINUE
D
• The State Bank of Pakistan plays a crucial role in maintaining
financial stability, regulating the banking sector, and formulating
monetary policy to support Pakistan's economic development
goals.
• It serves as a key institution in the country's financial
infrastructure, working towards a robust and resilient economy.
PRIMARY FUNCTIONS OF
SBP

Monetary Policy: One of its primary functions is to

formulate and implement monetary policy to achieve price
stability and support sustainable economic growth.
Regulation and Supervision: SBP regulates and
supervises the banking sector to maintain stability and
integrity. It issues licenses to banks and financial
institutions and ensures compliance with regulations.
 Primary Functions of
SBP Issuance: It has the sole authority to issue and
Currency
regulate the country's currency, including banknotes and
coins. The SBP ensures an adequate supply of currency to
meet the needs of the economy.
Foreign Exchange Management: SBP manages
Pakistan's foreign exchange reserves and regulates foreign
exchange transactions to maintain stability in the foreign
exchange market.
 Primary Functions of
SBP to the Government: The State Bank acts as the
Banker
banker and fiscal agent to the government, managing its
accounts, facilitating government borrowing, and
implementing monetary policy in coordination with fiscal
policy.
Research and Data Collection: It conducts research and
collects economic and financial data to support
policymaking and provide insights into the state of the
economy.
TAYBA HUSSAIN
BB-21-27
Secondary Functions
State Bank of Pakistan
 SECONDARY FUNCTIONS

Secondary
Functions

Management Relationship
Management Advisor to
of Foreign with IFIs
of Public Debt Govt.
Exchange
Management of Public Debt
When the government doesn't have enough money from taxes, it borrows
through issuing bonds or treasury bills. The SBP helps manage this debt
by issuing these financial instruments, keeping track of payments, and
ensuring that the government's borrowing remains sustainable and within
reasonable limits.

Management of Foreign Exchange

SBP manages the country's foreign currency and exchange rates. This
involves overseeing how much foreign currency is coming into the
country (through exports, investments, etc.) and going out (through
imports, foreign investments, etc
Relationship with International Financial Institutions (IFIs):
SBP's interacts with organizations like the International Monetary Fund
(IMF), World Bank, and Asian Development Bank (ADB). These
institutions provide financial support and advice to countries. The SBP
collaborates with them on various financial matters, such as receiving
loans, technical assistance, or policy.

Advisor to Government:
The SBP serves as an advisor to the government on monetary and fiscal
policies. It provides expert advice on matters related to money supply,
interest rates, inflation, and overall economic stability.
 Non-Traditional Functions

Non-traditional
Functions

Development Training Development Credit to

of Financial Facilities for of SFI Priority Sectors
Institutions Bankers
 Non-Traditional functions
Development of Financial Institutions:
SBP helps new banks, insurance companies, and microfinance institutions
to start and expand. This makes it easier for people and businesses across
Pakistan to access different financial services they need.

Training Facilities for Bankers:

The SBP provides training and capacity-building programs for bankers and
professionals working in the financial industry. These training initiatives
focus on improving skills, knowledge, and best practices in banking and
finance.
Development of Specialized Financial Institutions:
Besides regular banks, the SBP encourages the growth of special financial
services for specific needs like farming, housing, and small business
financing.

Credit to Priority Sectors:

SBP directs credit towards priority sectors of the economy, such as
agriculture, small businesses, export-oriented industries, and other sectors
crucial for economic development. This funding helps these areas grow,
make more jobs, and boost Pakistan's overall economy.
SOBIA SHAHEEN
BB-21-33
Department of SBP

State Bank of Pakistan

Accounts Department:
It provides effective & efficient accounting services & information for
planning, control and decision-making regarding annual budget and balance
sheet of the Bank.
Agricultural Credit Department (ACD):
It coordinates the operations of the Bank in connection with agricultural
credit and its relations with the provincial co-operative banks and any other
organizations engaged in the business of agricultural credit.
Banking Inspection Department (BID):
It achieves the regulatory goals of State Bank of Pakistan, i.e., ensuring the
safety and soundness of the financial system and safeguards the interests of
the depositors. It conducts regular on-site inspection of all scheduled banks
inclusive of the foreign banks.
Banking Policy Department:
It reviews and formulates proactive policy framework for Banks/ NBFIs
concerning diligent licensing, proposals for mergers/acquisition,
privatization matters, management of the banks.
Banking Supervision Department:
It ensures enforcement of regulatory and supervisory policies, monitors risk
profiles, and evaluates operating performance of individual banks and also
of the overall banking system.
Economic Policy Department:
It prepares monetary survey, credit plans, working papers for National
Credit Consultative Council (NCCC) and M&FCB meetings, keeps
constant watch and analyses developments in the financial markets.
Exchange & Debt Management Department:
Its function is effective and efficient execution of monetary and exchange
rate policies through money market and foreign exchange operations. It also
performs domestic debt management function.
Exchange Policy Department:
Its functions include formulation and regulation of policies relating to foreign
exchange matters.
Islamic Banking Department:
IBD has been set up recently with the objective of promoting and regulating
Islamic banking in the country. Its vision is "Make Islamic Banking the
banking of first choice for the providers and users of financial services". All
matters relating to Islamic banking in the country are taken care of by this
department.
Payment System Department:
It is set up recently to implement Real Time Gross Settlement (RTGS)
project, and to oversee the existing payment and settlement system in place
and develop a strategy with the banking industry for improvement in the
banking system.
Research Department:
It makes objective analyses of economic developments; explore inter-
linkages between macroeconomic policies; and examine their relationships
with overall economic growth.
Statistics Department:
The Department is responsible for collection, compilation, and publication of
statistics on economic, financial and monetary aspects most pertinent to the
central banking.
Human Resources Department:
Its objective is excellence at acquiring, developing and retaining the
right talent for SBP by continuous innovation & improvement of the HR
policies & procedures, providing effective facilitation and advisory
services to line departments and efficient and timely delivery of HR
services.
Audit Department:
It provides independent appraisal of all the activities of SBP aiming to
add value, improve operational efficiency, risk management & internal
control systems.
Information Systems Department:
It is responsible for oversight and management of the technology
operations, development and implementation, including all corporate
systems, LANs, WANS, databases, websites, system administration and
Corporate & Media Affairs Department:
This department is entrusted to arrange Central Board meetings. It takes care
of all the affairs related with Board of the Bank, acts as spokesman of the
Bank for media and other external stakeholders, and manages publications of
the State Bank of Pakistan.
Information Technology Department:
The ultimate goal of computerization is a gradual transformation towards
paperless environment (through the use of Intranet/internet exchange server)
and to leverage technology to achieve operational excellence.
MOHSIN GHAURI
BB-21-40
Monetary policy of
SBP
State Bank of Pakistan
Monetary
Policy:
Monetary policy is a set of actions
available to a nation's central bank to
achieve sustainable economic growth by
adjusting the money supply
Monetary Policy Objectives:
- Stabilization and demand management
- Ensuring monetary stability and fuller utilization of the economy’s productive resources
SBP's Approach:
- Focus on keeping inflation low and stable
- Low and stable inflation fosters sustainable growth and employment generation

Benefits of Low and Stable Inflation:

- Provides favorable conditions for sustainable growth and employment
- Reduces uncertainties for households and businesses, enabling confident decision-making in
consumption, savings, and investments

SBP's Balancing Act:

- Controlling inflation
- Ensuring payment system and financial stability
- Preserving foreign exchange reserves
- Supporting private investment
 How it Works:
The changes in market interest rates influence the borrowing cost for
consumers and businesses as well as the return on deposits for the savers.
Generally, lower interest rates encourage people to save less and
consume/invest more, and vice versa. Changes in the policy rate also
influence the value of financial and real assets, impacting people’s wealth
and thus their spending. The adjustment in demand finally affects the general
price level and thus inflation in the economy.
 SWOT ANALYSIS:

Strengths Weaknesses
• Strong internal control for • Technological
transactions backwardness
• Job security, good salary • Lack of latest procedures
and benefits for and practices
employees attract and • Staff is not well trained in
retain them IT
 Opportunities Threats

• Political instability and

• Investment in IT sector and
pressure can harm the
adopt latest technology
operations of SBP
• SBP can collaborate with
• Excessive government
stakeholders to update
borrowings
regulations, promote
interoperability, and conduct
• Circulation of fake
awareness campaigns for
currency/ counterfeit
digital banking inclusion.
currency
SARMAD TAREEN
BB-21-34
Role of SBP
In Economic Development

State Bank of Pakistan

State bank of Pakistan plays an important role in the process of economic
development, which is clear from the following points:

Issue of Notes

 State bank of Pakistan has monopoly in issuing currency notes. 5, 10,

50, 100, 5000 rupee notes are issued by the bank with respect to time.
Note of 500 rupees was issued on 1st April 1986 and 1000-rupee note
was issued on 18th July 1987. At present note of Rs.75 is also issued
by the state bank of Pakistan. The state bank has three offices of issue,
situated at Karachi, Lahore and Peshawar.
 Banker to the Government
 It is the bank of federal as well as provincial government. Its functions for the Govt are:
 Bank issued new notes on the behalf of government
 Bank also accepts the government cheques and drafts
 State bank responsible for transferring government funds at international level
 Bank arranges the public debts of federal and provincial government
 Bank receives no commission form the government
 It holds federal and provincial government securities
 State bank is liable for the payment of salaries and pension to government employees Banker's
Bank State bank of Pakistan is the bank of all commercial banks working in Pakistan.
Adviser to Government

 State bank of Pakistan works as an adviser to federal and provincial government. It guides

the government in financial and economic matters

 State bank assists the government in various credit schemes

 It informs the government about the monetary and fiscal situations of economy

 State bank helps the government in making investments

 Lender of Last Resort

 The state bake of Pakistan also acts as the lender of the last resort for the commercial banks. When

commercial banks are in crisis and have shortage of cash, then state bank comes to their help. State

bank may help the commercial banks by rediscounting their bills of exchange and by advancing

loans against securities.

Growth of Money Market

 Money market is not at its best level in Pakistan. Due to

illiteracy banking situations are not favorable. State
banks give much importance in the growth and
development of money market. Economic development
is impossible without the growth of money market.
Growth rate of banking sector is 17.0%.
Debts Management

 Our scarce resources and government policies are not able to run the mega
projects which needed heavy amount of resources. Due to shortage of
resources government has to depend upon other rich nations. All these
arrangements are the responsibility of the state bank on the behalf of
government.

International Relations
 State bank of Pakistan maintains relations with
different international financial institutions such
as IMF, WBG, etc. It negotiates different
contracts with these institutions on the behalf of
government.
Economic Information

State bank collects the information all over the country

and world throughout the year. It also annually published
its report, which is an extremely important document. This
exact information is very helpful in making economic
planning which is necessary for the economic
development.
Thanks!