The State Bank of Pakistan (SBP) injected a cumulative Rs2.64 trillion into the banking system through a combination of reverse repo and Shariah-compliant Modarabah-based Open Market Operations (OMO) conducted on September 18, 2026. The latest liquidity operation was carried out to address funding requirements in the market, with the central bank providing funds through different tenors and instruments. Of the total amount injected, Rs2.305 trillion was provided through conventional reverse repo operations, while another Rs335 billion was injected through the Shariah-compliant Modarabah-based facility.
Under the reverse repo portion of the operation, the SBP accepted Rs304.5 billion against the full amount offered for the seven-day tenor. The bids were received at rates ranging between 11.57% and 11.54%, with the accepted rate standing at 11.54%. Five quotes were offered and all five were accepted. For the 14-day tenor, banks and primary dealers offered Rs2.27925 trillion, against which the central bank accepted Rs2.00095 trillion. The quoted rates for the 14-day operation ranged from 11.56% to 11.51%, while the accepted rate was 11.53%. A total of 15 quotes were offered, of which 12 were accepted. Combined acceptance under the reverse repo injection operation stood at Rs2.30545 trillion.
The remaining Rs335 billion was injected through a Shariah-compliant Modarabah-based OMO, providing liquidity through an arrangement designed for participants in the Islamic banking market. For the seven-day tenor, Rs10 billion was offered and the entire amount was accepted at an accepted rate of 11.56%. One quote was offered and accepted. Under the 14-day tenor, participants offered Rs344.5 billion, while the SBP accepted Rs325 billion. The quoted rates ranged from 11.57% to 11.53%, with the accepted rate recorded at 11.53%. Five quotes were submitted and all five were accepted. The SBP noted that Rs272.5 billion out of Rs292 billion offered at the 11.53% rate was accepted on a pro-rata basis.
Open Market Operations are among the monetary tools used by the State Bank of Pakistan to manage liquidity conditions in the banking system. Through these operations, the central bank can either inject funds into the market when liquidity is tight or absorb surplus funds when liquidity conditions indicate excess availability. In an injection operation, the SBP provides funds to banks and primary dealers against eligible collateral, helping address temporary liquidity requirements within the financial system.
For conventional OMO injection transactions, eligible collateral includes marketable government securities such as Market Treasury Bills and Pakistan Investment Bonds. The use of these securities allows banks and primary dealers to obtain liquidity against assets that meet the central bank’s eligibility requirements. On the other side, the SBP can conduct OMO mop-up operations when it seeks to remove surplus liquidity from the banking system. In such transactions, the central bank sells eligible securities to banks against funds, thereby reducing excess liquidity available in the market.
The central bank also uses Shariah-compliant liquidity management instruments for the Islamic banking segment. Bai-Muajjal is identified by the SBP as a Shariah-compliant tool for managing liquidity within the Islamic banking system, with Government of Pakistan Ijara Sukuk serving as eligible securities for such transactions. Islamic banks and specialized Islamic windows of conventional banks can participate as eligible counterparties in Bai-Muajjal transactions, while banks and primary dealers are eligible counterparties for conventional OMO transactions.
The September 18 operation therefore combined conventional and Shariah-compliant liquidity management channels, with the larger share of the injection taking place through reverse repo transactions. The total Rs2.64 trillion liquidity provision reflects the SBP’s use of multiple OMO structures and tenors to meet funding needs across the banking system. The operation included both seven-day and 14-day facilities, allowing participating institutions to access liquidity through different maturity periods while the central bank determined accepted amounts and rates based on the bids received.
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