The State Bank performs primary, secondary as well as development functions. Primary functions are generally performed by id most all central banks and include issuance of notes, conduct of monetary policy, regulation and supervision of the financial system, acting us a bankers’ bank, lender of the last resort, and banker to the Government.
Secondary functions include agency functions such as management of public debt and foreign exchange reserves, advising the Government on policy matters and maintaining close relationships with international financial institutions.
In addition to these, the State Bank also assumes important developmental roles that range from the provision of frameworks for the institutionalization of savings and investment in the economy, creating an enabling environment offering capacity building opportunities to the banking sector in collaboration with the institute of Bankers Pakistan and the National Institute for Banking and Finance to assisting the Government in promoting the growth of sectors such as SMEs, Housing and IT.
State Bank has also been actively contributing to the promotion of the agriculture sector and encouraging utilization of locally manufactured machinery in industrial undertakings through enabling policy framework.
Under the State Bank of Pakistan Act 1956 and Banking Companies Ordinance 1962, the detailed functions and duties of State Bank are given below:
10 functions of state bank In Pakistan
- Issuing Currency Notes:
SBP issues all currency notes when needed. After its establishment, the SBP started to issue notes of denomination of Rs. 5, Rs. 10 and Rs. 100 in October 1948.
2,
Banker to Government:
SBP as banker to the government performs the following duties:
- Keeps the Govt. Accounts.
- Issues loans to Govt, when needed.
- Arranges foreign loans for Govt, when needed.
- Transfers the amount of provincial and central Govt.
- Gives valuable advices to the Gov’
- Supervises the Govt, departments ind audits their accounts.
- Keeps Govt’s securities and also sells and buys them.
- Banker’s Bank:
As a bankers’ bank, it performs the following dudes:
- Keeps and safeguards the cash reserves of the banks.
- Provides the facility of clearing-house to member banks.
- Grants loans to banks in emergencies and works as the lender of last resort
- Rediscounts the bills of exchange of member banks.
- Gives permission to open new banks.
- Supervises and directs the banks in the interest of country.
- Leader of Money Market:
It works as a leader of money market and works for the development of this market.
- Custodian of Foreign Exchange:
SBP is the custodian of foreign exchange reserve in the country. It also regulates the system and implements the policies.
- Custodian of the Metallic Money:
It also safeguards the metallic reserves of the country.
- International Representation:
It represents the country in foreign trade affairs and conferences. It also provides foreign exchange to importers and exporters for investment.
ADDITIONAL FUNCTIONS
- It provides training to the bank’s employees.
- It takes measures to improve saving tendency.
- It takes various steps for the development of industrial & agricultural sectors.
- It arranges international delegates to represent government in different conferences and meetings.
- It prepares different financial reports.
- The payment of foreign debts and interest thereon are also arranged by SBP.
- It works for the growth of capital market
SBP also pays the membership fee of international institutions.
