state bank of Pakistan is the central bank of the country. SBP beans with financial as well as economical matters of the county .

2. Central bank

3. Presented
by
Muhammad Aslam BC17-204

4.  German word;
Derived from “BANQUE”
Means Firm
Origin of
Bank
Italian word;
Derived from “BANCUS”
Means “BENCH”

5. Definition
 According Prof. Crowther;
Institution
Providing loans to lend
And create the credit money
What is
bank?

6.  Nuremberg conference:
 In 1548, held in Nuremberg, Germany
 To cover the loop holes in banking system
 In 1578, First Central bank was established, in
Geneva, Switzerland
Origin of
Central
Bank:

7.  Brussels conference:
 Before WW1 (1914-18),there was few central banks
 After “WW1” confusion in currency & exchange
market
 Which become cause for some banking failure
 So, the conference held in held at Brussels in 1920
 That every state must have their own central bank
Origin of
Central Bank
Cont.…

8. 2. What is Central Bank?
Definition;
 Institute which manage the following activities
 Nation’s currency
 Money supply
 Interest rate
 Oversee, their country commercial banking system
 Also called Reserve Bank Monitory Authority

10.  Reserve bank of India was the central bank of both Pakistan and India.
 On 30 Dec 1948 British Government commission distributed the reserve
bank of India’s reserve between Pakistan and India with ratio of 30:70.
 The losses incurred in the transition to independence were taken from
Pakistan’s share a total of 230 million.
 In May, 1948 M. Ali Jinnah took step to established SBP.
 That idea were implemented in June 1948.
 SBP commenced operation on July 1st 1948.
History

11.  Headquarter s:Karachi & Islamabad
 16 office in whole Pakistan
 31 departments
 At the time of its establishment the “State Bank of Pakistan” was semi-
government
 Paid up capital at the time of Nationalization in 1974 was Rs. 30 Million.
 Its 51% shares were held by the government and 49% by the general
public.
 Governor: dr.Reza Baqir
 19 past governors
 Ms. Shamshad Akhtar is only women governor in history of Pakistan,
Facts
and
Figures

12. Governor Corporate Management
Team (CMT)
Deputy Governor
(Policy)
International
Markets &
Investments
Domestic
Markets &
Monetary
Management
Office ofthe
Corporate
Secretary
Agriculture
Credit &
Microfinance
External
Relations
Internal Audit&
Compliance
Infrastructure,
Housing& SME
Finance
Strategic Planning
Islamic
Banking
Statistics&
Data
Warehouse Monetary
Policy
Economic
PolicyReview
Research
Library
Chief
Economist
(Monetary
PolicyGroup)
Executive
Director
(FMRM)
Executive
Director
(DFG)
Deputy Governor
(Islamic Banking,
Development Finance & IT)
Legend
Cluster Head Group Head
Department
Head
# IACD reports directly to the Audit Committee
Governor’sOffice
Executive
Director
(BPRG)
Off-site
Supervision&
Enforcement
BankingPolicy
& Regulation
Banking
Conduct &
Consumer
Protection
Executive
Director
(BSG)
Exchange
Policy
Banking
Inspection - I
Banking
Inspection - II
Executive
Director
(Human
Resources
)
Human
Resources
Information
Technology
Chief
Information
Officer
Museum, Art
Gallery & Archives
LegalServices
IT Strategy&
Project
Managemen
Information
Systems
Financial
Stability
Payment System
Deputy Governor
(Banking & FMRM)
Finance
Treasury
Operations
Executive
Director
(FRMG)
Risk
Management
Office of the
Chief
Information
SecurityOfficer
Research
Advisor
(Research
Group)
Executive
Director
(IBG)
Organogram – State Bank of Pakistan

13.  Ownership lies with Government of Pak under Section 4 of SBP Act 1956,
 The working lies with BOD, which comprises of Governor, 03 Deputy
Governor & 07 Directors. BOD meets at least 06 times a year, and at least
01 time a quarter,
 Under section 9 to 16 of SBP Act 1956, management of SBP comprises of
Governor as Chief Executive who is appointed for 03 years term, and he is
assisted by Deputy Governors who are appointed for 05 years,
 it has complete independence, and no Agency can issue or give instructions
or direction to any banking companies.
 Directors are appointed for 3 years
Constitution
Of SBP

14. Mission Statement
 Vision Statement
“To provide reliable banking services to
Government, financial institutions, public
and to act as operational arm of State
Bank of Pakistan”
Our vision is to develop the SBP(Bank) into a
strong and dynamic institution, equipped with
an efficient and professional human resource
base, having the requisite technology and fully
capable of providing quality service to
stakeholders, while complementing the State
Bank of Pakistan in achieving its objectives.

15.  SBP-Banking Services Corporation (SBP-BSC)
 National Institute of Banking and Finance (NIBAF)
 Deposit Protection Corporation (DPC)
Subsidies
of State
bank

16. Core Functions of SBP

17. A. Issuing Currency Notes
 Monopoly of Note Issue. accordingto act 1956
 Sole authority of notes issues, except coins
 Brings uniformity in the system
 Better control over the money supply
 Increases public confidence
 Min. amount of reserve for issue of notes is 1.2 bill
(30%)
 Issue offices: located in Karachi, Peshawar, Lahore& a
number of currency chest all over the country
 Twodepartments:
 Issuedepartment
 banking dep
Primary
functions
of SBP

18. Issuing Currency Notes:
 Methods for issuing notes
1. Fixedfiduciary system1956-1965
o New form of currencyprinciple
o Central government, issuenotes, fixed byGovernment
o Thisfixed amount, backedby government Securities
and bonds
o So,if government, issuemorecurrency
o Then, should be backed by Metallic reserve
oAdvantage:• Control over inflation
• No chance of currency over issue
Primary
functions
of SBP

19. Issuing Currency Notes:
 Methods for issuing notes
2. Proportional reserve system:
o Notes issuesis backedby metallic reserve
o Restof amount backedby Govt Bondsandsecurities
o 25%-40%backedby gold
o 60%-75%backedby Govt securities and bonds
In Pakistan; •30%against Gold reserve
70%against Govt securities and bonds
Primary
functions
of SBP

20. Issuing Currency Notes:
 Methods for issuing notes
3. Minimum reserve system:
• Increase or decrease currency supply
• according to economy climate
• Notes issuesshows
• Demand for money in theeconomy
• Price set by= by aggregate demand and aggregate
supply
Primary
functions
of SBP

21. B. Conduct of Monetary and Credit Policies
Conducted by SB to regulate and control the volume of money and credit supply in the
country in order to achieve following objectives:
Purpose
 full employment,
 price stability,
 Increase in production
 Economic Development
 Exchange Rate Stability Increase Exports
 Enhance Standard of Living
Primary
functions of
SBP

22. Instruments of credit policy
• Conduct of monitory and creditpolicy
– Toolsof formulating monitory and creditpolicy:
o3day repo
oT-bills
oOpen market operations
oCashreserve ratio
o Statutory reserveratio

23. C. Regulations and Supervision of banks:
Full power to supervise and control the banks
Bank Liquidation Bank restriction
Banks Performance Banks valuation
Primary
Functions
0f Sbp

24. Primary Functions 0f Sbp
Regulation and Supervision of the Financial System
On site
Monitoring

25. D. Bankers’ bank
Services to the scheduled banks
Excess Reserves kept with SBP
Remittances Facilities
Interbank Payments
Clearing house facility
Primary
Functions
Of SBp

26. E. Lender of last resort:
• Act as last lender of resort for commercial banks
• Used when banks have shortage of cash reserve
• Then, the state bank rescue them, from the danger
situation
• Method used is;
o Provide cash by discounting bill of exchange
o And treasury bills
• Safe guard the banks from the liquidation
Primary
Functions

27. F. Bankersto 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
Primary
Functions Of
SBp

28. A. Public debt management
o Also called Government debt or nationaldebts
o Thismay be own by either Federal or provincial government
o Thebudget deficit actually shows, public debts for particular
period
o Method for debtsare:
 Issuing bonds
 Issuing securities
 Byoffering bills
 Low economy countries, get the loan fromsuper-
nation
Secondary
Functions

29. B. Management of foreign exchange
1. Exchange Rate Regime
– SBP is responsible for foreign exchange (act 1947)
1. Development of Forex Market
- SBP prevent country currency from wide
fluctuations
Secondary
Functions

30. C.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
Secondary
Functions

31. Secondary Functions
D. Relationship with IFI’S:
Relationship with
IMF
World Bank
ADB

32. A. Development of the Banking System
NON-
Traditional
Functions
1. Promotion of Micro Finance:
 To expand at grass root level and to reduce poverty allevation , SBP facilitated
 Khushali Bank - Set up in Public sector
 First Micro Finance Bank (FMFB) - in Private Sector
Promotion of Islamic Banking
 Conferences, workshops, seminars and presentations are being conducted to
create
 public awareness

33. B.Training Facilities to Bankers
NON-
Traditional
Functions
 Training for Rural Finance Library Services
 Training Department – Scholarships for PhDs and courses on banking
 NIBAF - Provides special training to bankers on
Islamic Banking
 SEANZA Courses

34. 3. Credit to Priority Sectors
NON-
Traditional
Functions
Credit For Agriculture
Export Finance Scheme

35. Islamicization
NON-
Traditional
Functions
a. Secretariat of Council of Islamic Ideology
b. Commission for Transformation of Financial System
c. Measures for Transformation of Financial
System

36. Conclus
-ion
• SBP has its role important
in every sector of economy whether it is
• Industrial sector
• Agriculture sector
• Consumer sector
SBP provides guide lines to each of these sectors to uplift
the economy.