OUTLINE WB and Pakistan Importance Structure History Objectives Impact

1. State bank of Pakistan
BY
Abdul Ghaffar
We'llcome to Problem
SOLUTION

2.  WB and Pakistan
 Importance
 Structure
 History
 Objectives
 Impact
OUTLIN
E

3. The State Bank of Pakistan (SBP) is incorporated under the
State Bank of Pakistan Act, 1956, which gives the Bank the
authority to function as the central bank of the country. The
SBP Act mandates the Bank to regulate the monetary and
credit system of Pakistan and to foster its growth in the best
national interest with a view to securing monetary stability
and fuller utilization of the country’s productive resources.
WB and Pakistan

4. SBP-Banking Services Corporation (SBP-BSC)
Established under the SBP-BSC Ordinance 2001, SBP-BSC supports SBP in
performing functions such as handling of currency and credit management,
facilitating the inter-bank settlement system, and sale/purchase of savings
instruments of the Government on behalf of Central Directorate of National
Savings. SBP-BSC also collects revenue and makes payments for and on behalf of
the Government. It also carries out operational work relating to development
finance, management of public debt, foreign exchange operations and export
refinance. The Board of Directors of SBP-BSC, chaired by the Governor SBP,
comprises of all members of the Central Board of SBP and the Managing Director
of SBP-BSC.

5. National Institute of Banking and Finance (NIBAF)
NIBAF is the training arm of SBP, providing executive
development trainings to new inductees and various
levels of SBP employees. The subsidiary also conducts
international courses on central and commercial banking
in collaboration with the federal Government.
Furthermore, NIBAF offers training to SBP-BSC and other
financial institutions. NIBAF is incorporated under
Companies Ordinance, 1984 and has a separate Board of
Directors.

6. Deposit Protection Corporation (DPC) has been
established as a wholly owned subsidiary of SBP under the
DPC Act 2016. Upon commencement, this entity will be
responsible to provide protection of deposits of member
financial institutions operating in Pakistan. The objective
of DPC is to compensate the depositors to the extent of
protected deposits in the event of failure of a member
Financial Institution. The limit of protected deposits shall
be determined by DPC and will be announced in due
course.
Deposit Protection Corporation (DPC)

7. State bank of Pakistan is the central bank which was
established in 1948,initially SBP was entrusted with the task
to regulate the issue of bank notes and keeping of reserves
with a view to securing monetary stability in Pakistan.
It had got reforms in 1994 by increasing financial sectors and
the further strengthened by issuing 3 amendment
ordinances . The state bank of Pakistan perform both
traditional and developmental functions for achieving macro
economic goals.
Importance

8. Traditional function
classified in to two
groups.
The primary function
The secondary function

9. Developmental role of state bank
The main role of central bank is to get the efficient way of
managing monetary policy to get the macro-economic goals.
This role covers the development of important components
of monetary and capital markets but also to assist the process
of economic growth and promote the fuller utilization of a
country’s resources. The basic work of SBP as the central bank
is to control and monitor the money supply and also
controlling the interest rates.

10. The governance frame of work of SBP is specified in the State Bank of
Pkistan act.
This act provides for an independent central board of directors and
empowers it with general superintendence of affairs and business of the
bank .
The governor is the chairperson of the central board he manages the
affairs of on his behalf .
Except of the governor all directors of the central board are non executive
There are also some management committees to deliberate upon the
issues before taking any decision on them including corporate
management team which is the Apex of management committee .
Structure

11. Central board of directors
The central board of directors consists governor , secretory
finance and seven non executive directors selecting
dorectors selecting from each province, they are called by
federal government on interaction monetary and fiscal rate
policy
The governor is the CEO of bank is appointed by the
president of Pakistan for 3 years .
He controls the functions and manages the affairs of bank.

12. Corporate secretary
The corporate secretary plays a key role to
ensure timely provision of relevant information.
To all the directors of review before meeting
corporate secretary also records important
discussion .

13. The central board has constituted five
specific committees .
The committee on audit
 Committee on investment
Committee on building projects
Committee on human resources
Committee on monetary and credit policy.

14.  Reserve bank of india was the central bank of both
pakistan and india.
 On 30dec 1948 birtish govt commission distributed the
reserve bank of india,s reserve between pakistan and
india with ratio of 30:70.
 The losses incurred in the trasition to indepedence were
taken from pakistan,s share a total of 230 million.
 In may 1948 m. Ali jinnah took steps to established SBP.
 That idea were implemented in june 1948.
 Sbp commenced operation on july 1,1948.
History

15.  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.
History

16. 1.Maintaining Price Stability with Growth
2.Broadening Access to Financial Sector
3.Ensuring Soundness of Financial Sector
4.Exchange Rate and Reserve Management
5.Strengthening Payment Systems
Objectives

17. 1.Maintaining Price Stability with Growth
The fundamental task of the central bank is to preserve the value of the
currency. The understanding of the centrality of price stability has evolved over
the years, and it is worthwhile to review selectively recent developments in
thinking about this aspect of the role of the central bank, with an emphasis on
unsettled and controversial issues.
2.Broadening Access to Financial Sector
Financial inclusion is considered a prerequisite for sustainable economic
growth as it not only facilitates financial intermediation but also allows poor
people to undertake profitable investments and earn interest income on
savings1 .

18. 3. Ensuring Soundness of Financial Sector
State Bank of Pakistan (SBP), as per its legal mandate, is entrusted with the
responsibility of securing monetary stability and soundness of the financial
system. The monetary policy objective of price stability includes financial stability
as a secondary objective, which in turn ensures the soundness of financial system.
4.Exchange Rate and Reserve Management
Reserves consist of official public sector foreign assets that are readily available to
and controlled by the monetary authorities. Reserve management activities may
also encompass the management of liabilities, other short foreign
exchange positions, and the use of derivative financial instruments.

19. 5.Strengthening Payment Systems
This project aims to support Central Bank of Madagascar to strengthen
the legal/regulatory framework for payment systems, establish the
payment oversight function, and strengthen financial consumer
protection framework, thereby enhancing the contribution of payment
systems to financial inclusion through provision of responsible financial
products and services.

20. Trade liberalization is thought
to promote efficient utilization
of resources through enhancing
competition leading to efficient
allocation of resources, which
assists in the overall growth
process. Thus trade
liberalization is deemed to have
strong and positive correlation
with economic growth
Impact

21. However, trade liberalization could also generate
excess demand for imports leading to worsening of the
CAB of the country. According to Khan and Zahler
(1985), “trade liberalization may promote growth from
the supply side but, if the balance of payments
worsens, growth may be adversely affected from the
demand side because the payments deficits resulting
from liberalization are usually unsustainable and not
easily rectified by relative price (real exchange rate)
changes

22. Pakistan has liberalized its trade regime throughout the
1990s and the process of reforms is still going on.18 As a
result average effective tariff rate has fallen to 14.9
percent in 2006 from around 40 percent in the beginning
of 1990s (see Figure 7.1.1).
In recent years, however, trade liberalization has coincided
with the deterioration in the CAD which has swelled to US$
7.1 billion (4.9 percent of GDP) in FY07. The objective of
this study is therefore to empirically investigate the impact
of trade liberalization on the CAB of Pakistan