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•H/O of State Bank
•Functions & Role Of
•What is Interest Rate
Disadvantages of Interest
•Interest Rate in Pakistan
• Kamran Ali
• Waqar Aslam
network of institutions that offer financ
ial services within a country.
Banking System is a principal
mechanism through which the money
supply of the country is created and
An officially chartered institution e
mpowered to receive deposits,
make loans, and provide
checking and savings account
services, all at a profit.
History Of State Bank
Before independence on 14 August 1947, the Reserve Bank of India (central
bank of India) was the central bank for what is now Pakistan.
On 30 December 1948 the British Government's commission distributed the
Bank of India's reserves between Pakistan and India - 30 percent 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, Mr. Jinnah took steps to
establish the SBP immediately. These were implemented in June 1948, and
the State Bank of Pakistan commenced operation on July 1, 1948.
What Is Interest Rate
• Interest rate is the extra amount of money
charge on the borrowed money or asset.
• First time use in French Central Bank for
controlling money supply and stability in
economy in 1847.
Advantages & Disadvantages
• In Case of High Interest
– People maximum invest in banks (Savings)
– Purchase bonds
– Provide loans
• In Case of Low Interest Rate
– People takes Maximum Loan
– Benefits on Mortgage
– Investment in market (Saving Things)
• Interest rates are one of the major
drivers of our economy, setting the
pace for investment markets.
Learning how interest rate changes
can influence the marketplace can
also help you understand how they
impact your wallet.
Rs: 125 150 175
Amount of money
Demanded and Supplied
(Millions of Rupees)
Rs: 15 20 25
Amount of Investment
(Millions of Rupees)
Interest Rate (IR) in Pakistan
• Minimum IR 7.50 in 2002, Maximum IR
20% in 1996 and current IR is 8%.
• Simple interest
• Compound interest
• Floating Interest