State Bank of Pakistan facts for kids

Quick facts for kids
State Bank of Pakistan

Seal of the State Bank of Pakistan
Headquarters of the State Bank of Pakistan
Headquarters	I. I. Chundrigar Road, Serai Quarter Karachi-74000, Pakistan
Established	7 January 1948; 77 years ago (1948-01-07)
Ownership	100% state ownership
Governor	Jameel Ahmad
Central bank of	Pakistan
Currency	Pakistani rupee (₨) PKR (ISO 4217)
Reserves	$3.814 billion (March 2023)
Reserve requirements	4.00%
Bank rate	20%
Interest rate target	19–21%
Interest on reserves	19%
Preceded by	Reserve Bank of India

The State Bank of Pakistan (SBP) is the main bank for Pakistan. It is known as the country's central bank. A central bank helps manage a country's money and economy.

The SBP started its work on July 1, 1948. Its main office is in Karachi, which is a big financial city in Pakistan. The bank has offices in 16 other cities across Pakistan. These include the capital city Islamabad and the main cities of each province.

The SBP also has other important parts. One is SBP Banking Services Corporation, which helps the central bank with its daily tasks. Another is the National Institute of Banking and Finance, which trains people who work in banks. The SBP also owns the company that prints Pakistan's money.

How the State Bank of Pakistan Started

Before Pakistan became an independent country in 1947, the Reserve Bank of India was the central bank for the whole region. After Pakistan gained independence, the money and resources of the Reserve Bank of India were divided between Pakistan and India. Pakistan received 30% of the reserves.

In May 1948, Muhammad Ali Jinnah, who founded Pakistan, decided to create Pakistan's own central bank. This led to the State Bank of Pakistan opening its doors on July 1, 1948.

The first job of the State Bank of Pakistan was to print bank notes. It also had to keep enough money in reserve to make sure Pakistan's money stayed stable. This means making sure the value of the Pakistani rupee did not change too much. The bank also helped manage the country's money and credit system.

At first, some large industrial families in Pakistan helped fund the State Bank. They gave a part of their yearly profits to help the bank run.

Growing Responsibilities of SBP

The State Bank of Pakistan's duties grew bigger in 1956. The bank was then asked to manage Pakistan's money and credit system. It also had to help the country's economy grow in the best way possible. This included making sure the country's money was stable and that all its resources were used well.

In 1994, the State Bank was given more freedom to make its own decisions. This means it became more independent from the government. This independence was made even stronger in 1997.

These changes allowed the State Bank to control the banking sector on its own. It could also set its own monetary policy. Monetary policy is how a central bank manages the supply of money to control inflation and economic growth. The bank also gained the power to limit how much the government could borrow from it.

What the State Bank Does

The State Bank of Pakistan does many important jobs for the country. These jobs can be divided into two main types:

• Traditional Jobs: These are the usual tasks of a central bank.
  • Printing Money: The SBP is the only bank that can print Pakistan's money.
  • Supervising Banks: It makes sure other banks in Pakistan follow the rules.
  • Banker to Banks: It acts as a bank for other banks.
  • Lender of Last Resort: If other banks need money urgently, the SBP can lend it to them.
  • Banker to Government: It manages the government's money.
  • Managing Money Policy: It controls the amount of money in the economy to keep prices stable.

• Other Important Jobs:
  • Managing Public Debt: It helps the government manage its loans.
  • Managing Foreign Money: It looks after the country's foreign currency.
  • Advising the Government: It gives advice to the government on money matters.
  • Working with International Groups: It works with other financial groups around the world.

The State Bank also helps the economy grow in new ways. It helps create a strong financial system. It encourages people to save and invest their money. It also trains bankers and helps provide loans to important parts of the economy. The SBP has also been active in making Pakistan's banking system follow Islamic rules.

The bank also works to make sure more people have access to banking services. This is called financial inclusion. It is part of a global effort to help everyone use banks and financial tools.

Managing Money in the Economy

The State Bank of Pakistan is in charge of managing the country's money and credit. It does this to help the government reach its goals for economic growth and keeping prices stable.

The SBP controls how much money is available and where it goes in the economy. It uses different tools to do this. In the 1980s, Pakistan made big changes to its financial system. This changed how the SBP managed money. It moved from direct controls to using market-based methods.

The State Bank of Pakistan has also changed the look of many bank notes. This helps prevent people from making fake money.

Banking Services and Focus Areas

State Bank of Pakistan building

The State Bank of Pakistan looks at many different areas of banking. This helps it deal with changes in the economy. Here are some of the banking areas the SBP focuses on:

• Islamic Banking: The SBP's Shariah Board approves rules for Islamic ways of banking.
• Bank Supervision: It watches over how banks in Pakistan are doing their business.
• Microfinance: This is about providing small loans to people who might not get loans from regular banks.
• Small and Medium Businesses (SMEs): The SBP supports small and medium-sized companies.
• Rules for Banks: It sets rules like how much money banks must have.
• Sending Money: It helps make it easier to send money within Pakistan and from outside the country.
• Risk Management: It provides guidelines to banks on how to manage risks.
• Agricultural Loans: The SBP has schemes to help farmers get loans.

Bank Deposits in Pakistan

This table shows how much money people have deposited in commercial banks in Pakistan. The numbers are in millions of Pakistani rupees.

The SBP also manages:

• Legal services for banks.
• Payment systems, like the system for large, urgent payments (RTGS).
• Training and development for bank staff.
• Treasury operations, which involve managing the government's money.
• Strategic planning for the banking sector.
• The Pakistan Remittance Initiative, which helps people send money home easily.
• Information Systems and Technology.
• Risk management for the banking system.

Managing Currency

The State Bank of Pakistan allows commercial banks to use special companies to handle cash. These companies sort, check, and pack bank notes.

Governor of the SBP

The most important person at the State Bank of Pakistan is the Governor. As of 2022, Jameel Ahmed is the current Governor.

Board of Directors

The Board of Directors helps lead the State Bank. It has ten members. The Governor is the Chairman of the Board. The Secretary of the Finance Division from the Government of Pakistan is also on the Board. There are eight other directors, with one from each province, chosen by the government.

The Governor and the directors usually serve for three years.

Museum

The State Bank of Pakistan also has a museum and art gallery.

See also

In Spanish: Banco Estatal de Pakistán para niños

• Governor of State Bank of Pakistan
• National Bank of Pakistan
• Pakistani Rupee
• Banking in Pakistan
• List of central banks