The State Bank of Pakistan injected a cumulative Rs2.85 trillion into the market through conventional reverse repo and Shariah-compliant Modarabah-based Open Market Operations conducted on August 21, 2026. The latest liquidity operation included Rs2.41 trillion provided through conventional reverse repo transactions, while a further Rs440 billion was injected through the Shariah-compliant Modarabah-based operation. The move provides liquidity to eligible participants in the banking system through transactions against eligible securities and comes as part of SBP’s regular management of liquidity conditions in the financial market.
Under the conventional OMO, the central bank accepted the full amount of Rs2.41055 trillion offered by participating institutions. The accepted amount comprised Rs87.9 billion through seven-day reverse repo transactions and Rs2.32265 trillion through 14-day reverse repo transactions. The seven-day operation was conducted at an accepted rate of 11.54 percent, with offered rates ranging between 11.56 percent and 11.54 percent. For the 14-day tenor, the offered rate ranged from 11.55 percent to 11.51 percent, with the accepted rate set at 11.51 percent. Three quotes were offered and accepted under the seven-day operation, while 11 quotes were offered and accepted for the 14-day transaction.
The remaining Rs440 billion was injected through the Shariah-compliant Modarabah-based OMO. Under this operation, Rs597.5 billion was offered, while SBP accepted Rs440 billion through the 14-day reverse repo arrangement. The offered rate ranged between 11.56 percent and 11.52 percent, with the accepted rate at 11.52 percent. Eight quotes were offered and accepted. SBP also stated that a total amount of Rs246 billion was offered at the 11.52 percent rate, of which Rs88.5 billion was accepted on a pro-rata basis. The Shariah-compliant operation provides liquidity through an Islamic finance structure for eligible participants in the Islamic banking system.
Open Market Operations are among the tools used by SBP to manage liquidity within Pakistan’s banking system. Through OMO injections, the central bank provides funds to banks and Primary Dealers against eligible collateral when there is a liquidity shortage in the financial system. For conventional OMO injections, eligible collateral includes marketable government securities such as Market Treasury Bills and Pakistan Investment Bonds. The mechanism allows SBP to provide short-term funding while maintaining the required security arrangements against the liquidity provided to participating institutions.
SBP also conducts OMO mop-up operations when there is excess liquidity in the banking system. In such transactions, the central bank sells eligible government securities to banks in exchange for funds, thereby removing surplus liquidity from the market. The securities eligible for OMO mop-up transactions include Market Treasury Bills, which may be sold on a repo or outright basis. Banks and Primary Dealers are eligible counterparties for conventional OMO transactions, allowing the central bank to conduct liquidity management operations directly with participants in the financial market.
For Islamic banking liquidity management, SBP uses Shariah-compliant mechanisms, including Bai Muajjal, with GOP Ijara Sukuk serving as eligible securities. Islamic banks and specialised Islamic windows of conventional banks can participate as counterparties in Bai Muajjal transactions. The Shariah-compliant Modarabah-based operation conducted on August 21 therefore forms part of the broader framework through which SBP manages liquidity across both conventional and Islamic segments of Pakistan’s banking system.
The latest Rs2.85 trillion injection highlights the central bank’s continued use of market operations to address liquidity requirements among financial institutions. With Rs2.41 trillion provided through conventional reverse repo operations and Rs440 billion through the Shariah-compliant Modarabah-based OMO, the operation covered both conventional banking institutions and participants operating under Islamic banking structures. The transactions also demonstrate the role of eligible government securities and Shariah-compliant instruments in SBP’s liquidity management framework.
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