The State Bank of Pakistan executed large scale monetary interventions, injecting a aggregate total of Rs 12.93 trillion into the financial market through combined conventional reverse repo and Shariah compliant Modarabah based Open Market Operations. The primary portion of the liquidity support was directed through conventional reverse repo channels, accounting for Rs 12.5 trillion of the total amount, while Islamic monetary mechanisms supplied the remaining Rs 423.2 billion. These dual actions reflect ongoing central bank efforts to manage short term liquidity demands across commercial institutions and maintain orderly function within the wider financial system.
In the conventional reverse repo tranche, the central bank received significant interest from market participants across two distinct tenors. For the 7 day facility, primary dealers submitted bids totaling Rs 255.85 billion, all of which were accepted at a cut off yield of 11.54 percent, within a offered rate spread ranging between 11.54 percent and 11.56 percent across ten participating entities. The 14 day facility saw far larger participation, attracting total offers of Rs 12.37 trillion across 31 quotes. From this demand, the central bank accepted Rs 12.25 trillion at a cut off rate of 11.51 percent, implementing a pro rata acceptance of Rs 5.42 trillion out of Rs 5.54 trillion offered at the lowest accepted rate.
The Islamic banking segment received liquidity through a Shariah compliant Modarabah based facility designed for dedicated Islamic institutions and specialized Islamic windows of conventional banks. Within this operation, the 7 day tenor attracted five bids totaling Rs 63.2 billion, all of which were accepted in full at a cut off rate of 11.53 percent from a range spanning 11.53 percent to 11.56 percent. The 14 day Shariah facility received four bids totaling Rs 448 billion, with the central bank accepting Rs 360 billion at a rate of 11.52 percent. Bids placed at the cut off rate of 11.52 percent amounted to Rs 258 billion, resulting in a pro rata allotment of Rs 170 billion.
Open Market Operations serve as a central monetary policy instrument utilized by central banks to align market liquidity levels with wider policy objectives. During system liquidity deficits, reverse repo injections allow financial institutions to borrow short term funds against eligible government debt securities, including Market Treasury Bills and long term Pakistan Investment Bonds. Conversely, when excess funds accumulate, mop up operations absorb cash by selling government instruments back to commercial counterparties. In Islamic banking frameworks, liquidity adjustments utilize specialized structures such as Bai Muajjal and Modarabah techniques, backed by government Ijara Sukuk to maintain regulatory alignment while honoring Shariah compliance principles.
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