ISLAMABAD: The State Bank of Pakistan (SBP) conducted a combined conventional and Shariah-compliant Open Market Operation (OMO) on January 2, 2026, injecting a total of Rs13.55 trillion into the banking system. Of this, Rs12.99 trillion was provided through conventional reverse repo OMOs, while Rs558 billion was injected via Shariah-compliant Modarabah-based instruments.
In the conventional segment, the SBP accepted Rs750 billion of the Rs845.9 billion offered for a 7-day reverse repo at an effective rate of 10.51%, with a 14-day reverse repo totaling Rs12.24 trillion fully accepted at the same rate. Pro-rata allocation was applied where necessary, such as Rs194.1 billion out of Rs290 billion offered at 10.51%.
Meanwhile, the Shariah-compliant Modarabah OMO injected Rs616 billion in total, with Rs358 billion accepted for a 7-day tenor at 10.55% and Rs200 billion for a 14-day tenor at 10.54%, following pro-rata acceptance. These operations utilize Bai-Muajjal instruments, including GOP Ijara Sukuk, as eligible collateral, allowing Islamic banks and specialized windows of conventional banks to participate.
Open Market Operations are key tools for SBP to manage liquidity, either injecting funds into the banking system when shortages occur or mopping up surplus liquidity. In injection operations, SBP lends funds against eligible securities such as Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs). For Shariah-compliant operations, only Islamic instruments such as GOP Ijara Sukuk are eligible.
By using OMOs, SBP ensures smooth functioning of the financial system, maintains short-term interest rate stability, and provides banks with required liquidity to meet operational needs. These interventions play a critical role in balancing market liquidity and supporting monetary policy implementation.
The latest OMO demonstrates SBP’s continued commitment to managing liquidity effectively across conventional and Islamic banking systems, aligning with both market and Shariah-compliant frameworks.
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