Like a central bank of a developing country

Bank Daulat Pakistan also performs both traditional and developmental functions to achieve overall economic goals. The traditional functions, which are generally performed by almost all central banks around the world, can be divided into two groups: (a) Core functions including issuance of notes, regulation and supervision of the financial system, being a banker's bank, lender of last resort; , being the banker to the Government, and managing monetary policy, and (b) secondary functions including coordinating matters such as managing public debt, managing foreign exchange, etc., and other functions such as advising the Government on policy matters and international finance. To maintain close relations with institutions.

Non-traditional or developmental functions of State Bank include creation of financial framework, institutionalization of savings and investment, provision of training facilities to bankers, and provision of loans to priority sectors. Bank Daulat Pakistan has also been playing an active role in the process of adapting the banking system to Islamic principles. The main functions and responsibilities of State Bank can be classified as follows:

Regulation of Liquidity

As the central bank of the country, Bank Daulat Pakistan is entrusted with the responsibility of developing and managing monetary and credit policy in a manner consistent with the government's goals for growth and inflation, and overall economic policy. In terms of objectives, monetary and fiscal policies should be consistent with the recommendations of the Coordination Board. In terms of its functions, its main objective is two-fold: to maintain monetary stability for domestic price stability, as well as economic growth.

Promotion of State Bank uses both direct and indirect methods of monetary management to regulate the volume and direction of loan funds towards different uses and sectors. Until recently, the currency and credit situation was subject to severe factionalism and distortions in the credit markets. Pakistan embarked on a program of financial sector reforms in the late 1980s. Since then, several fundamental changes have been made in the monetary management system, characterized by a shift from administrative controls and quantitative restrictions to a market-based structure. A fund management plan has also been prepared. According to the plan, the intermediate target of M2 is "operating target" by adhering to the desired path of capital. Will get. Now indirect methods of control, such as cash reserve ratio and liquidity ratio, are being used, while the plan is largely dependent on market currency deals.

Ensuring the stability of the financial system

Regulation and Supervision Regulation and supervision of the financial system is one of the primary responsibilities of the State Bank, to ensure the stability and sustainability of the financial system as well as the protection of the interests of the depositors. The rapid development in information technology and the increasing complexity in modern banking activities have made the monitoring process more difficult and demanding. Institutional complexity is increasing, technical sophistication is increasing and the technical aspect of banking activities is expanding. All these changes require the State Bank to strive hard to keep pace with the rapidly changing financial landscape of the country. Similarly, new methods have been adopted to replace obsolete methods for better monitoring and supervision of financial institutions. Distance monitoring and on-site inspection and maintenance have now been adopted to monitor banking activities. State Bank receives regular receipts from various banks Conducts remote monitoring by regularly checking various reports. On the other hand, whenever necessary, the State Bank also visits the premises of the respective banks and conducts on-site inspection of them.

As the sources of credit were diversified, many non-banking financial institutions (NBFIs) were allowed to expand in order to widen the financial markets and deepen their base. The responsibility of regulation and supervision of these institutions has also been assigned to the State Bank. NBFIs Regulation and Supervision Department was established to regulate and guide the activities of these institutions. Apart from this, the State Bank has laid down prudential regulations (for commercial banks) and business principles (for NBFIs) to protect the interests of financial service consumers and to ensure the viability of these service providers. A comprehensive collection has been released.

This prudential regulation for banks prescribes guidelines on a number of issues, such as classification of long-term and short-term loans, exposure of banking facilities to money laundering and other illegal activities, in addition to setting limits on exposure to credit and risk. Preventing criminal use, laying down rules for payment of profit share, instructing banks to refrain from apparent swindling and prohibiting them from extending new loans to defaulters of old loans. The current procedure of balance sheet and profit and loss accounts has been changed to conform to international standards which ensures transparency of affairs. By revising the capital requirements, the minimum paid-up capital limit has been set at Rs 500 million. Under this rule, effective from December 1997, every bank is required to maintain 8 percent of its risk-weighted assets as capital and general reserves independent of financial liabilities.

"Business Principles" for NBFIs came into effect from the day these institutions came under the jurisdiction of the State Bank. Thus, Mudarabah and Ijara companies, which are also specialized types of NBFIs, have been regulated/supervised by the Securities and Exchange Commission (SECP) since January 1997, instead of the State Bank.

Exchange rate management and balance of payments One of the main responsibilities of the State Bank of Pakistan is to maintain the external value of the country's currency. In this context, it is required to manage foreign exchange reserves in the country as per the provisions of the Foreign Exchange Act, 1947, among other measures. The State Bank also acts as an agent for the Government, so under sub-sections 13(a) and 13(f) of section 17 of the State Bank of Pakistan Act, 1956, the Bank may purchase gold, silver or approved foreign exchange and Special Drawing Rights transactions with the International Monetary Fund are authorized.