Islamabad, 30 May 2025: In a significant move to stabilise the financial system, the State Bank of Pakistan (SBP) on Thursday pumped Rs1.14 trillion into the money market through both conventional and Islamic Open Market Operations (OMOs), aiming to ease short-term liquidity constraints faced by banks.
Dual Approach to Liquidity Management
According to figures issued by the SBP, Rs970 billion was disbursed via traditional reverse repo OMOs, while Rs178 billion was provided through Shariah-compliant Modarabah-based structures.
These injections are part of the central bank’s broader strategy to ensure the smooth functioning of the interbank market.
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Under the conventional OMOs, the central bank accepted:
- Rs250 billion for a 7-day tenor at 11.10%
- Rs720 billion for a 14-day tenor at 11.08%
Meanwhile, the Islamic OMOs included:
- Rs90 billion for a 6-day tenor at 11.10%
- Rs88 billion for a 14-day tenor at 11.10%
These tools allow the SBP to lend to banks against approved collateral, which for conventional banks includes Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs). For Islamic financial institutions, the transactions are structured using GOP Ijara Sukuk, complying with Shariah principles.
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Aimed at Ensuring Market Stability
The large-scale injection reflects the SBP’s proactive stance in managing liquidity while preserving monetary stability amid changing macroeconomic trends.
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By facilitating access to short-term funding, the central bank aims to support credit flow, maintain interbank rates within desired ranges, and reinforce the transmission of monetary policy.
As financial institutions navigate economic headwinds, these operations underscore the SBP’s role in promoting confidence and operational resilience within Pakistan’s banking sector.
