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State Bank of Pakistan

This document discusses the role and functions of the State Bank of Pakistan (SBP), which is the central bank of Pakistan. It outlines that the SBP regulates the country's currency and credit systems to promote monetary stability. The SBP performs both traditional central banking functions like monetary policy as well as developmental roles. It also oversees the regulation and promotion of Islamic banking in Pakistan through various initiatives and by establishing regulations for Islamic financial products and institutions. The future of Islamic banking in Pakistan depends on further developing Shariah-compliant financial instruments and expanding the infrastructure for Islamic finance.

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Bilawal Shabbir
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356 views16 pages

State Bank of Pakistan

This document discusses the role and functions of the State Bank of Pakistan (SBP), which is the central bank of Pakistan. It outlines that the SBP regulates the country's currency and credit systems to promote monetary stability. The SBP performs both traditional central banking functions like monetary policy as well as developmental roles. It also oversees the regulation and promotion of Islamic banking in Pakistan through various initiatives and by establishing regulations for Islamic financial products and institutions. The future of Islamic banking in Pakistan depends on further developing Shariah-compliant financial instruments and expanding the infrastructure for Islamic finance.

Uploaded by

Bilawal Shabbir
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Presented by:

M.Ibrahim(1194)
Adnan manzoor(1179)
Syed ali raza naqvi(1232)

Presented to:
Prof.AZMAT
STATE BANK OF PAKISTAN
The State Bank of Pakistan (SBP) is 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
ROLE of SBP in economy 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".(that is the role state bank is
being playing for our economy).
Traditional and developmental
functions of SBP
 The State Bank of Pakistan also performs both the
traditional and developmental functions to achieve
macroeconomic goals. The traditional functions, may be
cassified 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.
Continued………

 The non-traditional or promotional


functions, performed by the State Bank
include development of financial
framework, institutionalization 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.
Regulation of liquidity

 The State Bank of Pakistan has also been


entrusted with the responsibility to carry out
monetary and credit policy in accordance with
Government targets for growth and inflation
with the recommendations of the Monetary and
Fiscal Policies Co-ordination Board without
trying to effect the macroeconomic policy
objectives.
State bank with banking of Pakistan
 The Stat 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;
1. State Bank’s Shariah Board Approves Essentials and Model Agreements
for Islamic Modes of Financing
2. Procudure For Submitting Claims With Sbp In Respect of Unclaimed
Deposits Surrendered By Banks.
3. Banking Sector Supervision in Pakistan
4. Micro Finance
5. Small Medium Enterprises (SMEs)
6. SBP.Scheme for Agricultural Financing
7. Opening of Foreign Currency Accounts with Banks in Pakistan under new
scheme.
Overview of Islamic banking
in Pakistan.
Commission for Transformation of Financial System (CTFS) was constituted in
January 2000 in the State Bank of Pakistan.
− It introduced Shariah compliant modes of financing which included creating
legal infrastructures conductive for working of Islamic financial system,
launching a massive education and training program for bankers and their
clients and an effective through media for the general public to create
awareness about the Islamic financial system.
− It also dealt with major products of banks and financial institution , both for
assets and liabilities side
ISLAMIC banking with SBP.
In September 2001 it was decided by Government that the shift to interest free
economy would be made in a gradual and phased manner and without causing
any disruptions and was also agreed that state bank Pakistan would consider for:
− Setting up subsidiaries by the commercial banks for the purpose of conducting
Shariah compliant transactions
− Specifying branches by the commercial banks exclusively dealing in Islamic
products, and
− Setting up new full-fledged commercial banks to carry out exclusively banking
business based on proposed Islamic products.
In January, 2002 State Bank of Pakistan gave first Islamic Banking License to
Meezan Bank Ltd.
Present state of Pakistan
islamic banking
The progress of Islamic Banking in Pakistan has
been commendable during the last two years.
There is huge appetite for Islamic financial
services .
the growth, is however, constrained by the lack
of infrastructure support & dearth of
professional islamic bankers.
CONTINUED……….

Currently, there are 6 licensed full fledged (4 operational) Islamic Banks


with 40 branches
10 conventional banks with standalone Islamic Banking Branches with the
total branch network of 35 branches operating in thirteen cities of all the
four provinces in the country (as of 31 March 2005)
Applications for a few more banks are under consideration.
The central bank is pursuing a three-pronged strategy to promote Islamic
Banking in Pakistan
Establishing full-fledged Islamic banks in the private sector;
setting up of subsidiaries by the existing commercial banks; and
allowing stand-alone branches for Islamic banking by the existing
Commercial banks.
Regulation of islamic capital & money
market

Currently, Islamic Banking Sector operates


under the existing laws & regulation for banks
The State Bank of Pakistan (SBP) established
the Islamic Banking department on 15
September 2003.
The Department was given the task of
promoting & developing the Shariah
Compliant Islamic Banking as a parallel &
compatible banking system in the country.
Currently, the Islamic Banking Department (IBD) consists
of the following
three divisions
− Policy Division
− Shariah Compliance Division
− Business Support Division

To regulate & supervise the Islamic Banking Sector SBP is


working on the
areas of Risk Management, Corporate Governance,
Prudential Regulations,
Accounting & Shariah Standards etc.
A Shariah Board is also in place at the State Bank of
Pakistan, having experts
to guide the Islamic banking industry.
FUTURE PROSPECTS.
The Government of Pakistan intends to continue promoting Islamic Banking
in
the country while keeping in view its linkages with the global economy &
existing commitments to local & foreign investors
There is a great need to develop instruments for liquidity management by
banks & monetary management by the SBP.
The pace of Islamization of the financial system will crucially depend on the
development of Shariah compliant instruments to be used for government
transactions
There is need for innovative products i.e., development of financial
instruments on the basis of Musharika, Mudaraba, Leasing, & Salam –
related to wide spectrum of maturities, projects & issuing entities

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