STATE BANK OF PAKISTAN (SBP)

S.KAMAL HAYDER KAZMI,
Research Analyst
, PAGE
Oct 26 - Nov 01, 2009

Over the past one decade, SBP the central bank of the country has substantially enhanced its institutional capacity to deliver its mandate more effectively and is regarded as one of the most dynamic and progressive public sector institutions.

Currently, the responsibility of a central bank in a developing country goes well beyond the regulatory duties of managing the monetary policy in order to achieve the macroeconomic goals. This role covers not only the development of important components of monetary and capital markets but also assistance to the process of economic growth and promoting utilization of a country's resources.

GOVERNORS OF STATE BANK OF PAKISTAN

(Late) MR. Zahid Hussain (1948 to 53) (Late) MR. Abdul Qadir (1953 to 60) (Late) MR. S.A. Hasnie (1960 to 67)
(Late) MR. Mahbubur Raschid (1967 to 71) MR. S.U. Durrani (1971 to 71) MR. Ghulam Ishaq Khan (1971 to 75)
(Late) MR. S. Osman Ali (1975 to 78) MR. A.G.N. Kazi (1978 to 86) MR. V.A. Jafarey (1986 to 88)
MR. I.A. Hanfi First Term (1988 to 89) Second Term (1990 to 93) MR. Kassim Parekh (1989 to 90) DR. Muhammad Yaqub (1993 to 99)
Dr. Ishrat Husain (1999 to 2005) Dr. Shamshad Akhtar (2006 to 2009) MR. Syed Salim Raza (2009 to up till)

The SBP, besides discharging its traditional functions of regulating money and credit, has played an active developmental role to promote the realization of macro-economic goals.

BANK OPERATIONS

Bank operations have been widened considerably by including the economic growth objective in its statute under the SBP Act 1956. The bank's participation in the development process has been in the form of rehabilitation of banking system in Pakistan, development of new financial institutions and debt instruments in order to promote financial intermediation, establishment of development financial institutions (DFIs), directing the use of credit according to selected development priorities, providing subsidized credit and development of the capital market.

EXCHANGE RATE TREND IN PAKISTAN

YEAR HIGH LOW CLOSE AVERAGE
FY05 61.6 57.55 59.64 59.35
FY06 60.45 59.57 60.22 59.87
FY07 61.01 60.18 60.37 60.65
FY08 69.75 60.3 68.4 62.73

One of the major responsibilities of the State bank is the maintenance of external value of the currency. In this regard, the bank is required, among other measures, to regulate foreign exchange reserves of the country in line with the stipulations of the Foreign Exchange Act 1947.

As an agent to the government, the bank has been authorized to purchase and sale gold, silver or approved foreign exchange and transactions of Special Drawing Rights with the International Monetary Fund under sub-sections of the SBP Act, 1956.

The bank is responsible to keep the exchange rate of the rupee at an appropriate level and prevent it from wide fluctuations in order to maintain competitiveness of our exports and maintain stability in the foreign exchange market.

MINIMUM CAPITAL REQUIREMENT

To restore macroeconomic stability and improve credit supply, SBP took a number of measures in phases and relaxed the Statutory Cash and Liquidity Reserves Requirements. In 2008, the State bank announced new Minimum Capital Requirements (MCR) for next five years for banks: in Dec 2008 Rs 5 billion, Dec 2009 Rs 6 billion, Dec 2010 Rs 7 billion, Dec 2011 Rs 8 billion, Dec 2012 Rs 9 billion, and Dec 2013 Rs 13 billion.

LEARNING RESOURCE CENTRE

SBP STATISTICS & DWH DEPARTMENT AUG-09

ITEMS (MN RS)
Net Foreign Assets 590,026
Claims on Nonresidents 1,292,704
Liabilities to Nonresidents 702,678
Claims on Other Depository Corporations 297,002
Net Claims on General Govt 1,198,651
Liabilities to Central Govt 20,409
Claims on other Sectors 26,227
Currency in Circulation 1,257,738
Transferable Deposits 682
Shares and Other Equity 690,449

The management of SBP has established state-of-the-art Learning Resource Centre (LRC). The purpose built tastefully decorated LRC is housed inside the premises of the SBP in a sparkling, newly renovated facility. LRC is the knowledge hub of training and development activities at the SBP. It offers more than training and technical assistance, which makes it a much sought after meeting for holding excellent conferences, seminars, meetings and training sessions in a very safe and secured environment.

Key socioeconomic indicators of the country indicate a need for more dedicated efforts. The government is giving high priority to macroeconomic stability and social sector development in the country.

State bank can play a very important role in the economic development of Pakistan because it is responsible for conducting monetary policy in Pakistan. Economic development of Pakistan can be further improved as State bank also maintains the stability of the national currency and improves trade balance by influencing positively on exports. The SBP gives targets to commercial banks for providing loans in the field of agriculture, industry, housing every year.

The prescribing of credit targets for these priority sectors greatly help in raising productions and Pakistan's economy.