state bank of pakistan (with history)

8/3/2019 State Bank of Pakistan (With History)

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State Bank of Pakistan

State Bank of PakistanHeadquarters Karachi,Pakistan

Established 1948

Central bank of Pakistan

Currency Pakistani rupee

ISO 4217 Code PKR

Website www.sbp.org.pk

The State Bank of Pakistan (SBP) (Urdu: ) is thecentral bankof 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 wasnationalized, the scope of its functions was considerably enlarged. TheState 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.

Contents

[hide]

1 History

2 Regulation of liquidity 3 Banking

o 3.1 Bank assets and liabilities

4 Governor

5 Central Board of Directors

6 See also

7 External links
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[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 1948the 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 forIndia.

The losses incurred in the transition to independence were taken from Pakistan's share (atotal 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 ofbank notes and keeping of reserves with a view to

securing monetary stability in Pakistan and generally to operate the currency and creditsystem 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 tosecuring 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 governmentissued 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 andexclusive 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)
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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 alsoincreased 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 macroeconomicgoals. The traditional functions, may be classifiedinto 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 theagency 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 Bankinclude

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 thebanking system.

[edit] Regulation of liquidity

The State Bank of Pakistan has also been entrusted with the responsibility to carry out

monetary and credit policy in accordance withGovernment targets for growth andinflation with the recommendations of theMonetaryandFiscalPolicies Co-ordination

Board without trying to effect the macroeconomic policy objectives.

The state bank also regulates the volume and the direction of flow of credit to different

uses and sectors, the state bank makes use of both direct and indirect instruments ofmonetary management. During the 1980s, Pakistan embarked upon a program of

financial sector reforms, which lead to a number of fundamental changes. Due to these

changed the conduct of monetary management which brought about changes to theadministrative controls and quantitative restrictions to market based monetary

management. A reserve money management programme has been developed, for

intermediate target of M2, that would be achieved by observing the desired path ofreserve money - the operating target.

State Bank of Pakistan has changed the format and designs of many bank notes which arecurrently in circulation in Pakistan. These steps were taken to overcome the problems of

fraudulent activities.

[edit] Banking
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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 Banks 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 newscheme.

Handbook 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 1,466,019 932,059 559,5422006 2,806,645 2,189,368 799,285

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

Remittances
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[edit] Governor

The principal officer of the SBP is the Governor. The current Governor of State Bank ofPakistan is Mr. Yaseen Anwer.

[edit] Central Board of Directors

The Central Board consists of nine members: the Governor (who is Chairman), the

Secretary, Finance Division, Government of Pakistan and seven Directors, including

one Director from each Province, to be nominated by the Federal Government ensuringrepresentation to agriculture, banking and industrial sectors. The Directors are appointed

for terms of up to three years.

1. Chairman: Yaseen Anwar ( Governor SBP)

2. Dr. Waqar Masood Khan (Secretary Finance)

3. Zaffar A. Khan4. Mirza Qamar Beg

5. Asad Umar6. Waqar A. Malik

7. Sahar Z. Babar - Corporate Secretary SBP(Secretary to the Central Board)

[edit] See also

Pakistan portal

Governor of State Bank of Pakistan

National Bank of Pakistan Zarai Taraqiati Bank Ltd.

Pakistani Rupee

Banking in Pakistan
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state bank of pakistan (with history)

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