The State Bank of Pakistan (SBP) conducted a major liquidity operation on March 6, 2026, combining conventional and Shariah-compliant instruments to inject a total of Rs1.9 trillion into the financial system. Of this total, Rs1.52 trillion was injected through conventional reverse repo Open Market Operations (OMOs), while Rs380 billion was deployed via Shariah-compliant Modarabah-based OMOs, demonstrating the central bank’s dual approach to liquidity management in both conventional and Islamic banking sectors.
The conventional reverse repo operations comprised injections of Rs163.5 billion for a 7-day tenor at accepted rates of 10.54%, alongside Rs1.364 trillion for a 21-day tenor at an accepted rate of 10.52%. The operations were fully accepted, reflecting active participation by banks and primary dealers seeking short-term liquidity support from the SBP.
On the Shariah-compliant side, Rs360 billion was injected for a 7-day tenor at an accepted rate of 10.55%, and an additional Rs20 billion for a 21-day tenor at an accepted rate of 10.53%. These operations utilized Bai-Muajjal structures, allowing Islamic banks and specialized windows of conventional banks to access funds against eligible securities such as GOP Ijara Sukuk. The Shariah-compliant OMO framework ensures liquidity management aligns with Islamic finance principles while maintaining market stability.
Open Market Operations are a key monetary policy tool used by the SBP to balance liquidity in the banking system. In injection operations, the central bank lends funds to banks or primary dealers against eligible collateral, which includes Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs) for conventional operations, and GOP Ijara Sukuk for Shariah-compliant injections. Conversely, OMO mop-up operations allow SBP to absorb excess liquidity by selling government securities to banks in exchange for funds, helping stabilize short-term interest rates and market conditions.
The March 6 injections were part of SBP’s ongoing efforts to ensure sufficient liquidity in the system, especially in light of ongoing market demands and economic conditions. By providing both conventional and Islamic liquidity support, the SBP facilitates operational flexibility for banks while promoting adherence to regulatory and Shariah standards.
Eligible counterparties for these operations include conventional banks, Islamic banks, and primary dealers, reflecting a broad-based approach to maintaining liquidity across multiple segments of the financial sector. The dual operations highlight SBP’s proactive role in managing monetary conditions, supporting credit flow, and stabilizing the short-term funding environment.
Overall, the Rs1.9 trillion injection underscores SBP’s commitment to maintaining financial stability, ensuring sufficient liquidity, and supporting both conventional and Islamic banking institutions. The operations also reinforce investor confidence in Pakistan’s banking system by providing predictable and transparent tools for managing liquidity needs across tenors and instruments. The central bank continues to monitor market conditions closely, ensuring that liquidity management measures align with broader economic objectives and sustainable financial growth.
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