Report on Sbp

Topics: Monetary policy, Central bank, Inflation Pages: 7 (2001 words) Published: November 4, 2012
4) BELA.
STATE BANK OF PAKISTAN is the central bank of Pakistan. While its constitution, as originally lay down in the State Bank of Pakistan Order 1948, remained basically unchanged until January 1, 1974, when the bank was nationalized, the scope of its functions was considerably enlarged. The State Bank of Pakistan Act 1956, with subsequent amendments, forms the basis of its operations today. The headquarters are located in the financial capital of Pakistan, Karachi with its second headquarters in the capital, Islamabad. MISSION STATEMENT

State bank mission is to promote soundness and stability of the banking system through positive off- site supervision and prompt enforcement action. VISION STATEMENT

Vision is to “transform off-site supervision and enforcement department into a highly professional and dynamic department full equipped to proactively supervision banks and other financial institutions. * HISTORY OF STATE BANK OF PAKISTAN

Before independence on 14 August 1947, during British colonial regime the Reserve Bank of India was the central bank for both India and Pakistan. On 30 December 1948 the British Government's commission distributed the Reserve Bank of India's reserves between Pakistan and India -30 percent (750 M gold) 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 Muhammad Ali Jinnah (Founder of Pakistan) took steps to establish the State Bank of Pakistan immediately. These were implemented in June 1948, and the State Bank of Pakistan commenced operation on July 1, 1948

Muhammad Ali Jinnah, the founder of Pakistan, making a speech at the opening of the State Bank of Pakistan. Under the State Bank of Pakistan Order 1948, the state bank of Pakistan was charged with the duty to "regulate the issue of bank notes and keeping of reserves with a view to securing monetary stability in Pakistan and generally to operate the currency and credit system of the country to its advantage". State bank of Pakistan Implemented in June 1948 and Commence operation on July 1 1948. * FUNCTIONS OF STATE BANK OF PAKISTAN:

1. Banker to the Government:  As banker to the government, SBP:     a. Receives deposits (taxes, fees, fines, etc.) on behalf of the federal government.      b. Disburses payments (tax refunds, interest, etc.) on behalf of the federal government.      c. Manages the national debt—buys, sells, and cashes    government securities and pay interest/profit on them.      d. Lends money to the federal government as needed.  2.  Banker to Banks:  As banker to the scheduled banks, SBP:      a. Holds deposits made by them as a part of their required reserves—5% at this time.         b. Lends them funds as a “lender of the last resort” to meet their pressing needs by discounting their bills of exchange and other 3.  Acts as a Clearing House:

Provides facilities, physical and/or electronic, to scheduled banks to clear cheques and other claims drawn against each other—deposited by their customers for collection--by adding up what they owe or owed them and transfer funds from their accounts at SBP. 4. Supervisor of Banks and other Financial Institutions:

One of the fundamental responsibilities of the State Bank is regulation and supervision of   the financial system to ensure its soundness and stability as well as to protect the   interests of depositors. The banking activities are now being monitored through a system of ‘off-site’ surveillance and ‘on-site’ inspection and supervision. Off-site surveillance is conducted through regular checking of various returns regularly received from the different banks. On...
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