Presented by: Sana Rahat
Ayesha Rasheed
Introduction
The State Bank of Pakistan (SBP;Urdu: ) is
the central bank of the country.
State Bank of Pakistan (SBP) is unique in the sense that it
started its function in a newly born country,
It is the apex body of Pakistan
The vision of its founders was a stable monetary system in
Pakistan with fuller utilization of the country's productive
resources (SBP Act, 1956).
Introduction
State Bank of Pakistan
Head Quarter
Karachi ,Pakistan
Established In
July 1, 1948
Governor
Ashraf Mahmood Wathra
Reserves
US $ 20.450 billion
Mission
To provide reliable banking
services to Government,
financial institutions, public
and to act as an operational
arm of State Bank of Pakistan.
Vision
Our vision is to develop the
SBP BSC (Bank) into a strong
and
dynamic
institution,
equipped with an efficient and
professional human resource
base, having the requisite
technology and fully capable of
providing quality service to
stakeholders,
while
complementing the State Bank
Goals
To enhance profitability and
maximization of SBP share through
increasing leverage of existing customer
base and diversified range of products.
Excellence in Direction
Excellence in Growth Excellence
in Performance
Excellence in Management
Excellence in Achievement
CORE VALUES
Int
egr
ity
T
e
a
m
w
Ex o
ce r
lle k
nc
e
Ac
co
un
ta
bil
ity
Re
sul
t
ori
en
te
d
Cou
rag
e
History of SBP
Before independence, the Reserve Bank of India was the
central bank of sub-continent.
Ratio of 70:30 between India & Pakistan.
30% reserves was equal to Rs 750 million.
RBI continued its duties as central bank for both countries
History
Victoria Museum Building at the Ingle
Road was rented from the Karachi
Municipal Corporation and swiftly
refurbished.
Timeline of History
First Governor of SBP
1st Governor Zahid Hussain
Took Office
June 10,1948
Left Office
July19,1953
Time in
Office
5 Years , 40 Days
Organizational Structure
of SPB
Current Governor of SBP
Name
Mr. Ashraf Mahmood Wathra
Appointed on
April 29,2014
Experience
35 Years of commercial and investment
banking experience
Prior to SBP
Served National Bank of Pakistan
Habib Bank Limited(1999-2012)
Educational
Qualification
Faysal Bank(1992-1999)
Masters Degree in Business
Administration
SBP BODs-10 members
Chairman: Mr. Ashraf Mahmood
Wathra
Governor
Dr. Waqar Masood Khan
Secretary, Finance Division,
Government of Pakistan
Appointed on April 16, 2013
Dr. Tariq Hassan
Mr. Mohammad Riaz
Khawaja Iqbal Hassan
Mr. Ardeshir Khursheed Mark
Hafiz Mohammad
Yousaf
Mr. Zubyr Soomro
Mr. Sarmad Amin
Sahar Z. Babar
Departments of SBP
State bank of Pakistan have 28 departments
Department
Function
Agriculture Credit and
Microfinance Banks
Establishing funding
mechanisms.
Creating financial literacy.
Banking Inspection Department
2
Maintain soundness of the
financial system
Safeguarding the interest of
depositors
Banking Inspection Department
1
Entail the emerging risk areas
CAMELS Framework
Banking Policy & Regulations
Department (BPRD)
Incorporating required
improvements in the existing
regulatory environment;
Adaptation of the international
best practices
The Banking Surveillance
Department
Supervise financial institutions
Managing various types of risks
Domestic Markets and
Monetary Management
Department
Implement the Monetary
Policy
Exchange Policy Department
(EPD)
Overall stability of the foreign
exchange market
Engaged in the process of policy
formulation and implementation.
Economic Policy Review
Department
publish SBPs Annual Report and
Quarterly Reports,
The State of Pakistans
Economy,
External Relations Department
Press releases in English and Urdu,
Finance Department
Custodian of SBPs books of
accounts.
Legal Services Department
Identification of opportunities
Information Systems &
Technology Department
Reduce operating costs,
Improve end-user
performance, and Meet
overall business goals.
Infrastructure, Housing & SME
Finance Department.
Enabling regulatory framework for
SMEs, Assessing their credit
needs
Internal Audit & Compliance
Department
Risk Management, Controls, and
Governance Processes to
ascertain the adequacy and its
proper functioning.
International Markets &
Investments Department
Managing cash flow for all
currencies
Managing cash for government
debt payments
Islamic Banking Department
Shariah compliance framework
Monetary Policy Department
(MPD)
Macroeconomic Framework
and Forecasting Division
Monetary and Credit Analysis
Division
Policy Formulation Division
The Corporate Secretary
Good corporate governance
practices,
Off-Site Supervision &
Enforcement Department
Ensures effective enforcement of
regulatory and supervisory
policies,
Monitors risk profiles,
Evaluates operating performance
of individual banks
Payment Systems Department
Publishes high quality research in
economics and finance in the form
of short notes, working papers,
and journal articles
Risk management department
Monitoring the compliance of
tolerance limits defined in risk
policies & procedures
FUNCTIONS OF SBP
Traditional Functions
Issue of Notes
Primary
Functions
Regulation of
Financial
System
Conduct of
Monetary
Policy
Lender of last
resort
Banker's Bank
Government
Bank
Secondar
y
Functions
Management
of Public Debt
Management
of Foreign
Exchange
Primary Activities
Sole Authority to Issue Notes
Under Section 24 of the State Bank of
Pakistan Act, 1956.
Departme
nts
Issuing
Departme
nts
Banking
Departme
nts
There are four issue departments one each in four provincial
capitals
Karachi,
Lahore,
Peshawar and
Quetta.
Under section 30 of the State Bank Act, 1956 the assets of the
Issue Department should at no time fall short of its liabilities,
i.e. Total notes issued.
Of the total amount of the assets
of the Issue Department, a
stipulated
amount,
which
Government can vary from time to
time, is to be kept in the form of
Gold coins,
Gold bullion,
Silver bullion,
special drawing rights held with
IMF,
or approved
foreign
exchange.
The remainder of the assets of Issue
Department should consist of
Rupee coins,
Rupee securities and the
Internal bills of exchange and other
Commercial papers
as are eligible for purchase by the Bank under
Section 17 (2a, 2b, & 2d) of the SBP Act, 1956.
Issuance of Commemorative
(Yadgari) Notes
The State Bank also issues
"Commemorative (Yadgari)" notes and
coins of different denominations at
occasions of national importance.
Yadgari Notes
Banker to Government
It acceptsthe depositsof
cash,cheques anddrafts bythe
Government
The Federal andProvincial
governments canobtain
advancesfrom the Bank
On behalfof Governmentsthe
Bankalso undertakes sale/purchase of
gold, silver, approved foreign
exchange
Lender of the Last
Resort
SBP provides loan and re-discount facilities
to scheduled banks in times of dire need.
provided against government securities, trade
bills, agriculture bill, etc.
short-term in nature
To bring flexibility- 3 day Repo facility was
introduced in Feb1992
Against the 3-day repo facility, funds
are allowed by accepting
Market Treasury Bills/ Federal
Investment Bonds/ Pakistan
Investment Bonds
Bankers Bank
Keeps
thedeposits
ofcommercia
Extensive
l banks,
Remittances
whichprimar
facilities to
ilyconstitute
banks at a
the statutory concessional
reserves of
rate
scheduled
banks
Manages the
operations of
clearing houses.
Regulation of Financial System
SBP safeguard the soundness of the
financial system.
State Bank ofPakistan has been given
vast powers underthe
State Bank of Pakistan Act, 1956,
Banking Companies Ordinance, 1962,
Banks Nationalization (Amendment)
Act, 1974 and
Microfinance Institutions Ordinance
2001
The financial sector in Pakistan comprisesof
Commercial Banks,
Specialized banks,
Development Finance Institutions,
Microfinance Banks,
Non-banking Finance Companies (NBFCs)
Modarabas,
Stock Exchange and
Insurance Companies.
Supervision
Off-site
Monitoring
regular checking of various returns
received by banks
On-site
Monitori
ng
in the premises of the concerned
banks when required.
Prudential Regulations for different areas
Corporate and Commercial
Banking,
Small and Medium
Enterprise Financing,
Consumer Financing and
Micro Financing while
those for Agriculture
Financing
Prudential Regulations for Corporate and Commercial Banking
The regulations focus on
Credit Risk Management,
Corporate Governance,
Anti-Money Laundering and
Operations.
Prudential Regulations for Consumer Financing
Encourage the banks to diversify their loan portfolio
It covers any financing allowed to individuals for
meeting their
personal,
family or
household needs and include credit cards, Auto
Loans, Housing Finance and other consumer
financing.
Prudential Regulations for SME
Financing
It encourage the flow of bank credit to the SME sector,
keeping in view their important role in the economic
development. Its features are;
Shift from collateral based lending to cash flow based lending
Maximum limit of clean financing against personal guarantees
increased to Rs. 3 million for SMEs.
The requirement for banks/DFIs to obtain copy of accounts has been
relaxed for exposures of up to Rs.10 million.
Prudential Regulations for Micro Finance Banks
No (MFBs/MFIs) shall commence
business unless it hasa minimum paidup capital as prescribed in MFIs
Ordinance 2001.
Maintain equity = at least 15% ofits
risk-weighted assets.
Maintain a cash reserve = not lessthan5% of its
time and demand liabilities in a current account
opened with the SBP or its agent.
Cannot extend loans exceeding Rs.100,
000/- to asingle borrower.
Conduct of Monetary & Credit Policies
Indirect
Instruments
Statutory Reserve
Requirement, and
Statutory
Liquidity Ratio
Open Market
Operations
Discount rate (3day repo rate),
T-bill auction
rate,
Direct
Instruments
Credit ceilings,
Set credit/deposit
ratio,
Fix margin
requirements,
and
Control the rate
of return.
Indirect Instruments
Reserve Requirement
percentage of commercial banks liabilities which
they are required to hold as reserves at the central
bank.
Statutory Cash Reserve Requirements (CRR)
Presently the requirement is
5% on weekly average basis
subject to daily minimum of 4%
of Time & Demand Liabilities
Statutory Liquidity Ratio
Commercial banks are required to keep some
fraction of their assets in the form of
cash,
Treasury Bills (T-Bills) or
other approved securities.
This fraction is called Statutory Liquidity Ratio.
Main objective
to ensure that banks have sufficient funds in the
form of liquid assets.
Current SBP Statutory Liquidity
Ratio
Presently the requirement is 15%
(excluding 5% statutory cash reserve) of
the total of its time and demand
liabilities in Pakistan
Open Market Operations-ASK
Initiated
January 1995
Till October 1995
Unidirectional
After October
1995
Bidirectional
Mop-up liquidity in case of excess
Refrained to inject liquidity in case of
Liquidity crunch
Repo transactions are used to mop
up liquidity and Reverse Repo to
inject It.
Open Market Operations
SBP
Injects Money by
lending
against
collateral
through
reverse
repo
transaction or by an
outright purchasing
SBP mops-up
Money from
market by
selling
Securities or by
Repo
Transaction
SBP OMO JUNE 10,2016
T-Bills Auction System
6
month
s
3
month (24
weeks
s (12
weeks) )
12
month
s (1
year)
The Six months T-bill is considered the most important
benchmark and is considered to be the signaling tool of SBP
for interest rate movements
Procedure of SBP
Auction of MTBs are conducted on alternate
Wednesdays.
Selected
Financial institutions i.e. Primary
Dealers are allowed to access the auction.
Two days prior to conducting of auction MTB
auction target is announced keeping in view,
Government borrowing position, SBP monetary
policy stance and money market situation.
Two days prior to opening of bids a tender
Notice, inviting sealed bids in MTB auction, is
publicized in Newspapers and displayed on
Reuters.
February 4 ,
2016
SBP sold
Rs319.93 billion
worth of treasury
bills in an auction
Target
Rs 350 billion
target was set for
auction
April 6,2016
All bids rejected by
SBP
received bids of
Rs.339.12 billion
Target
Rs 300 billion
SBP 3-Day Repo Rate
SBP provides a lending facility to the
scheduled banks for up to 3 days
through Reverse Repo transactions.
The interest rate charged on this facility
serves as the main tool to give interest
rate signals to the money market.
Increase in this rate gives a signal of
monetary tightening.
SECONDARY FUNCTIONS
Public Debt Management
The Bank is responsiblefor the
management of government debt under
sub-section 13(e) of section 17, and
section 21 of the SBP Act, 1956.
The following actions are involved in this regard:
Subscribing Federal
and Provincial
governments
securities at the time
oftheir issue
Sale/purchase of such
securities in
theMoney Market
(through auction,
OMO or discount
window)
Payments of interest
to holders of public
debt instruments
Management of Public Debt
Security Department
In order to efficiently manage the public debt,
adepartment namely, Securities Department
set up in December, 1990 for the businessof
government securities
Exchange &Debt Management Department
(EDMD)
This department was subsequently merged with
foreign exchange dealing room and a new
departmentExchange & Debt Management
Department (EDMD) was
created in February, 2000.
Non Traditional
Functions
Non
traditional
functions
Development
of
Banking
System
Commerci
al banking
Micro
Finance
Promotion
of Banking
Islamic
Training
Facilities
To Bankers
Institute of
bankers
Pakistan
Training
Departme
nt
NIBAF
Training
Islamic
Banking
SEANZA
courses
Scholarshi
p For Ph.D.
Training
For Rural
Finance
Development
of
Financial
Institution
Credit to
Priority
Sectors
Credit for
Agricultu
re
Export
finance
scheme
Development of banking
system
At the time ofindependence
The commercial banking system in
Pakistan had virtually collapsed with the
closure of large number of bank offices
which were run and managed by nonMuslims who migrated to India.
No independent monetary authority, and
the Government of Pakistan had to
resortto the Reserve Bank of India for its
currency and monetary affairs.
Commercial banking
1949
1951
1990
Scheme for setting up the NationalBank of
Pakistan initiated.
Theforeign banks to open new offices only in
port towns or in other large cities
Remarkable growth in the number of offices.
Foreign banks expand across the countrypromoted healthy competition
Micro finance banks
Khushhali Bank
Set up in public sector
TheFirst Micro Finance Bank
(FMFB
set up in private sector.
Also engage in mobile banking
Safeguard the interest oftheir
clients
Promotion of Islamic Banking
In order to meet the latent demand for
Shariah compliant solutions
Create public awareness and develop
better coordination by
Training Facilities to Bankers
Bank Officers Training Scheme"
introduced within one month of its
establishment.
On July 2, 1948-university graduates
especially with mathematics,
economics and commerce
backgrounds.
in 1950-For clerks, State Bank
introduced departmental examinations
system
Institute of
bankers
Pakistan
Training
department
NIBAF
TRAINING
FACILITIE
S TO
BANKERS
Training in
Islamic
banking
SEANZA
courses
Scholarship
for Ph.D.
Training for
rural finance
Library
services
Institute of Bankers Pakistan
Started functioning from
September 17, 1951.
Conducts annual essay
competition on various
economic issues and
awards prizes to the
four best essays.
Training Department/Division
1981-82 - two Training
Units were established one each at Karachi and
Lahore to cater to the
training needs of the
Bank's staff
Merged with Human
Resource Department in
order to make human
resource managements
more efficient at SBP.
National Institute of Banking and
Finance (NIBAF)
Converted into an independent subsidiary of SBP in
2003
It operates two campuses one at Islamabad and the
other at Karachi (North Nazimabad).
Design and develop training modules/programs.
Training material preparation and publication.
Deliver Domestic and International training
programs.
Evaluate training programs.
Business planning and review.
Provide Support for training programs, seminars
and
workshops.
Training on Islamic Banking
The NIBAF has also designed a module on
Islamic banking and finance in its training
courses designed for State Banks officers.
Courses of the Institute of Bankers,
Pakistan have been revised to include
topics on
Islamic economics,
Banking and
Finance.
SEANZA (SOUTH EAST ASIA,
NEWZELAND, AUSTRALIA)
Scholarships for PhD
Started scholarships for PhD in
economics and finance
These scholarships are available to those
candidates who are able to get
admissions in top ranked universities of
the world.
For domestic candidates, one
scholarship is also available for PhD
student of Pakistan Institute of
Development Economics (PIDE).
Training for Rural Finance
The objective of such training programs is creating
awareness among the farming community and sharing
of knowledge and experience with stakeholders.
The participants of these training courses include
Local/ regional nominees,
Agricultural credit officers from Zarai Taraqiati
Bank Ltd.,
Provincial co-operative banks,
Domestic private banks,
Chambers of agriculture,
Farmers association
Library Services
In order to cater to information needs of the bankers,
researchers, students and general public, a main
library was setup in 1949 at Central Directorate of
State Bank of Pakistan, Karachi.
The library has a rich collection of books, technical
reports, Government documents, periodicals and
magazines mainly relating to the subjects of
Economics,
Banking,
Finance,
Management,
Commerce, etc.
sufficient reading material on Islam (in English,
Urdu, Arabic, and Persian languages) and
literary works in national and regional languages are
also available in the library.
The State Bank library has been financed adequately
through annual budget as well as special grants for
procurement of books and periodical literature.
Interesting news items, features, articles, policy
statements issued by the Government
functionaries, speeches / addresses of
presidents and prime ministers, etc. appearing in
the national dailies
Development of Specialized Financial Institutions
actively participated in setting up a number of specialized
credit institutions designed to meet the long and medium-term
financing needs of various sectors of the economy.
These institutions include
Pakistan Industrial Credit and Investment
Corporation of Pakistan
(PICIC),
Industrial Development Bank of Pakistan (IDBP),
National Development Finance Corporation (NDFC),
Agricultural Development Bank of Pakistan12 (ADBP),
Federal Bank for Cooperatives (FBC) and
House Building Finance Corporation (HBFC).
These institutions were established to provide credit
to industrial, agricultural and other sectors.
CREDIT TO
PRIORITY
SECTORS
Credit for
agriculture
Export
finance
scheme
Credit for agriculture
The Agriculture Credit Scheme was introduced in
1972 by the SBP under SBP Act 1956
scheme was reviewed and renamed as Supervised
Agricultural Credit Scheme in 1986
Scheme was once again entirely revamped in
2001, which included a complete value chain
of farm & non-farm activities, like production,
transportation, packing, polishing, grading,
crating, godowns, cold storage, silos, steel /
metal capsules, along with forestry, poultry,
fisheries ,livestock, dairy products, fruits,
vegetables, marketing & exports
Export Finance Scheme
Conclusion
After analyzing the structure and functions of State
Bank of Pakistan we arrive at a conclusion that
SBP is playing a crucial role in economic
development of our country.
It supervises the financial system of Pakistan to
ensure its soundness and stability.
State Bank is performing well as all of its
operations are well-planned, organized and
foolproof.
