The State Bank of Pakistan (SBP) executed a substantial Open Market Operation (OMO) today, providing a combined liquidity injection of Rs13.32 trillion into the country’s banking system. The injection was carried out through a mix of conventional reverse repo operations and Shariah-compliant Modarabah-based OMO transactions, aimed at stabilizing short-term liquidity imbalances within the financial sector.
Out of the total amount, Rs13 trillion was funneled through conventional reverse repo transactions. The remaining Rs270 billion was injected via Islamic finance instruments under Modarabah-based structures, in alignment with Shariah principles. The dual-mode operation reflects SBP’s adaptive approach in catering to both conventional and Islamic banking segments.
The conventional OMO accepted Rs13.05 trillion against the total Rs13.31 trillion offered by market participants. This included Rs904.25 billion for a 7-day tenor at a weighted accepted rate of 11.02 percent, and Rs12.15 trillion for a 14-day tenor at an accepted rate of 11.01 percent. These operations were executed against eligible government securities, such as Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs), used as collateral.
Parallel to the conventional OMO, the Islamic segment witnessed the injection of Rs270 billion, fully accepted against the total offered amount. This included Rs120 billion under a 7-day reverse repo agreement with an accepted rate of 11.15 percent and Rs150 billion under a 14-day tenor at a rate of 11.13 percent. These operations were conducted under Shariah-compliant liquidity management structures, using GOP Ijara Sukuk as eligible collateral.
Open Market Operations are a vital part of SBP’s monetary policy implementation toolkit. In cases where liquidity shortages arise, injection-based OMOs allow the central bank to lend funds to banks and primary dealers in return for secure government-backed collateral. Conversely, when there is excess liquidity, SBP uses mop-up operations to absorb the surplus by selling securities to commercial banks.
The inclusion of Shariah-compliant liquidity management tools such as Bai Muajjal and Modarabah-based OMOs highlights SBP’s commitment to supporting Islamic banking within the broader regulatory structure. These operations offer tailored liquidity solutions for Islamic banks and Shariah-compliant banking windows of conventional institutions.
The scale and immediacy of today’s dual OMO operation underline the central bank’s active monitoring of liquidity conditions and its readiness to ensure the stability of short-term money markets. By addressing liquidity pressures promptly, SBP reinforces confidence in the functioning of the financial system while maintaining alignment with its overarching monetary policy objectives.
As economic uncertainties continue to shape global and domestic markets, such interventions signal a strong regulatory focus on risk management and financial system resilience. Market analysts are likely to interpret this move as a precautionary step aimed at ensuring banking institutions remain well-capitalized and liquid in the face of tightening credit conditions and fluctuating macroeconomic indicators.