The State Bank of Pakistan (SBP) has conducted a large-scale Open Market Operation (OMO), injecting Rs11.47 trillion into the financial system to address liquidity requirements. The intervention was carried out through both conventional reverse repo operations and Shariah-compliant Modarabah-based transactions, underscoring SBP’s dual approach to supporting both conventional and Islamic banking systems.
Out of the total liquidity injection, Rs11.03 trillion was funneled through reverse repo OMOs, while the remaining Rs444 billion was injected via Shariah-compliant operations. These injections are part of SBP’s regular liquidity management mechanism aimed at ensuring stability in the money market and supporting banking institutions in meeting short-term funding needs.
According to the detailed breakdown, the conventional OMO accepted Rs2.23 trillion for a 7-day tenor at an accepted rate of 11.01 percent. Additionally, Rs8.8 trillion was injected under a 14-day tenor, also at a rate of 11.01 percent, against total offers of Rs9.09 trillion. This brought the cumulative accepted amount through reverse repo OMOs to Rs11.03 trillion.
Meanwhile, Shariah-compliant OMOs also played a vital role in liquidity support. A 7-day Modarabah injection of Rs324 billion was accepted at a rate of 11.11 percent, while another Rs120 billion was accepted for a 14-day tenor at the same rate. Together, these amounted to Rs444 billion, further reflecting SBP’s efforts to balance liquidity across both conventional and Islamic financial institutions.
Open Market Operations are a central tool in SBP’s monetary policy framework. By injecting liquidity, SBP lends funds to banks and primary dealers against eligible collateral such as Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs). These injections address short-term shortages in the system, ensuring banks have sufficient funds to continue lending and supporting financial activity.
In contrast, when the banking system has excess liquidity, SBP conducts mop-up operations by selling government securities to absorb surplus funds. For Islamic banking, instruments such as GOP Ijara Sukuk are used under Shariah-compliant liquidity management tools like Bai-Muajjal.
This week’s significant liquidity injection highlights the central bank’s active role in maintaining monetary stability amid fluctuating liquidity conditions. With both conventional banks and Islamic institutions eligible as counterparties, the dual structure ensures inclusivity across the financial sector.
Market participants view these injections as crucial for maintaining smooth operations in the money market, particularly at times when demand for short-term liquidity is elevated. The accepted rates, tightly clustered around 11.01 percent for conventional transactions and 11.11 percent for Shariah-compliant deals, also indicate SBP’s steady stance in guiding short-term interest rates.
The Rs11.47 trillion injection is one of the largest liquidity operations conducted recently, reflecting the scale of funding needs across Pakistan’s banking system. By deploying both conventional and Islamic channels, SBP continues to reinforce financial stability while supporting the diverse structure of the country’s financial ecosystem.
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