State Bank of Pakistan

State Bank of Pakistan is the Central

Bank of the country. While its
constitution, as originally laid down in
the State Bank of Pakistan Order
1948, remained basically unchanged
until 1st January 1974 when the Bank
was nationalised, 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.

Under the State Bank of Pakistan

Order 1948, the Bank was charged
with the duty to "regulate the issue of
Bank notes and keeping of reserves
with a view to securing monetary State Bank of Pakistan
stability in Pakistan and generally to
operate the currency and credit system of the country to its advantage". The scope of the Bank’s operations was
considerably widened in the State Bank of Pakistan Act 1956, which required the 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". Under financial sector reforms, the
State Bank of Pakistan was granted autonomy in February 1994. On 21st January, 1997, this autonomy was
further strengthened by issuing three Amendment Ordinances (which were approved by the Parliament in May,
1997) namely, State Bank of Pakistan Act, 1956, Banking Companies Ordinance, 1962 and Banks Nationalisation
Act, 1974. The changes in the State Bank Act 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 in Banks Nationalisation Act abolished the Pakistan Banking Council (an
institution established to look after the affairs of NCBs) and institutionalised the process of appointment of the
Chief Executives and Boards of the nationalised commercial banks (NCBs) and development finance institutions
(DFIs), with the Sate Bank having a role in their appointment and removal. The amendments also increased the
autonomy and accountability of the Chief Executives and the Boards of Directors of banks and DFIs.

The State Bank of Pakistan (SBP) (Urdu: ‫ )بینک دولت پاکستان‬is 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.

[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

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:

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.
[edit] 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
• Procedure 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

[edit] 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.[1][2][3]

Year Deposits Advances Investments

2002 1,466,019 932,059 559,542
2006 2,806,645 2,189,368 799,285

[edit] 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
• Pakistan Remittance Initiative

[edit] Governor
The principal officer of the SBP is the Governor. The current Governor of State Bank of
Pakistan is Mr. Shahid Hafiz Kardar.

[edit] Central Board of Directors

1. kamran laghari Kardar, Chairman
2. The Secretary Finance Member (Presently Mr. Salman Siddique)
3. Mr. Kamrani Y. Mirza Member
4. Mr. Zaffar A. Khan Member
5. Mr. Tariq Sayeed Saigol Member (retired, position presently vacant)
6. Mirza Qamar Beg Member
7. Mr. Asad Umar Member
8. Mr. Waqar A. Malik Member
9. Mr. nwab srajudolla