The State Bank of Pakistan (SBP) carried out one of its largest liquidity injections in recent months, injecting a total of Rs12.34 trillion into the financial system on August 29, 2025. The move was executed through conventional Reverse Repo Purchase operations and Shariah-compliant Modaraba-based Open Market Operations (OMOs), aimed at ensuring liquidity stability in money markets.
According to the SBP, the central bank accepted a combined amount of Rs12,344.35 billion during the operations. Of this, Rs12,015.85 billion was injected through reverse repo purchases, while another Rs328.5 billion was provided via Shariah-compliant OMOs. The measures reflect SBP’s ongoing strategy to balance liquidity needs while maintaining control over short-term interest rates.
For the reverse repo segment, SBP received strong market participation. A total of 27 bids were submitted for the 14-day tenor, collectively offering Rs11,824.85 billion at rates ranging between 11.01 percent and 11.12 percent. The central bank accepted all 27 bids at a uniform cut-off rate of 11.01 percent, underscoring its preference for market-wide stability.
In addition, four bids were submitted for the 7-day tenor, amounting to Rs191 billion. The bids carried offered rates between 11.06 percent and 11.09 percent, and SBP accepted the entire volume at a rate of 11.06 percent.
Parallel to the conventional operations, SBP also executed Shariah-compliant Modaraba-based OMOs, a mechanism increasingly relevant for Islamic financial institutions. Under the 14-day tenor, two bids amounting to Rs172 billion were submitted, both at 11.13 percent, which SBP accepted in full. Similarly, three bids were received for the 7-day tenor, totaling Rs156.5 billion with rates between 11.14 percent and 11.15 percent. The central bank accepted all three bids at 11.14 percent.
Market participants note that such sizable liquidity injections highlight the central bank’s efforts to address funding needs of commercial banks while maintaining the efficiency of both conventional and Islamic financial markets. With inflationary pressures, evolving credit demand, and fluctuations in deposits, SBP’s intervention ensures stability in the short-term money market and smoothens financial intermediation.
Liquidity management has been a recurring theme in Pakistan’s banking ecosystem throughout 2025. The latest injection adds to several earlier operations where SBP deployed trillions of rupees to support banks in meeting cash flow requirements. Analysts believe that by keeping rates steady and providing broad access to liquidity, the central bank is helping maintain confidence in financial markets amid ongoing economic reforms and global uncertainties.
The use of both conventional and Shariah-compliant tools also reflects SBP’s dual approach to cater to the diverse needs of Pakistan’s banking sector. With Islamic banking steadily expanding its share in deposits and advances, the reliance on Modaraba-based OMOs is expected to grow further, providing more balanced liquidity solutions across the financial system.
Going forward, liquidity management will remain a cornerstone of SBP’s monetary policy toolkit, particularly as the economy navigates structural reforms, fiscal adjustments, and evolving global financial conditions.
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