9. Primary functions
•Issuance of notes
oSbp has monoply according to act
1956
oTwo departments:
Issue departmant
banking dep
10. Cont;
o Min. amount of reserve for issue of notes is
1.2 bil (30%)
o Issue offices: located in Karachi, Peshawar,
Lahore& a number of currncy chest all over
the country
11. Primary functions
• Conduct of monitory and credit policy
– Tools of formulating monitory and credit policy:
o 3day repo
o T-bills
o Open market operations
o Cash reserve ratio
o Statutory reserve ratio
12. Primary functions
• Regulation & Supervision of financial system:
• Pakistani law has given power to SBP to monitor
financial system
• SBP has issued prudential Regulation to insure
safety and soundness of banks/DFI
• SBP can monitor banking activities through:
o off-site inspection
o On-site inspection
13. Primary functions
• Bankers bank
• Bankers of Last resort
– Provide loans and discount facility to bank
– Prevent banks from liquidity
– Mostly provide short term loans to meet
temporary requirements of funds.
14. Primary functions
• Bankers to Government:
SBP provides following services to the government:
– Accept cash deposits, checks and drafts by the government
– Federal & provisional governments keeps their deposits
with SBP free of interest
– Federal & provisional governments obtain advances from
SBP
– SBP does not charge any commission
– SBP purchase gold, silver, securities etc on behalf of
government.
15. Secondary functions
• Public debt management
– SBP is responsible for public debt (act 1956)
– Responsible for payment of interest to public debt
– Sources
– Need
– objective
– Securities department(1990)
16. Secondary functions
• Management of foreign exchange
– SBP is responsible for foreign exchange (act 1947)
– SBP prevent country currency from wide
fluctuations
17. Secondary functions
• Advisor to Government
– Advise on financial and economic matters particularly on
monitory policy
– Advise on loan operations
– Participate in economic policy making
– Monitory and fiscal policy coordination board (MFPCB)
– MFPCB coordinate fiscal, monitory, trade policy &
exchange rate policy
18. Secondary functions
• Relationship with IFI’s
– SBP deals with IMF on behalf of Government of
Pakistan
– Deals with other international financial organizations
like world bank, bank of international settlement