The State Bank of Pakistan (SBP) has announced that the remuneration rate for Special Cash Reserve Accounts (US$) will remain unchanged at 3.32% for the month of May 2025. The notification, issued by the central bank, confirms that the rate is being maintained at its existing level, offering continuity to banks and financial institutions managing foreign currency deposits under this regulatory framework.
This remuneration rate applies specifically to deposits held under Foreign Exchange Circular No. 25 of 1998, which governs the mobilization and handling of foreign currency accounts within Pakistan. These accounts, including the Special Cash Reserve Account (SCRA), are part of the broader regulatory mechanism through which the SBP manages foreign exchange reserves, liquidity, and overall financial stability in the banking system.
The Special Cash Reserve Account is a tool mandated by the SBP that requires banks to maintain a certain portion of foreign currency deposits with the central bank. The remuneration paid on this account is calculated on a daily product basis, meaning interest is accrued daily based on the amount maintained in the account. However, the applicable rate is notified at the end of each month and is subject to review depending on monetary policy goals, reserve management needs, and prevailing market dynamics.
By keeping the SCRA rate steady at 3.32%, the SBP has signaled its intention to maintain the current monetary stance, at least in terms of its treatment of foreign currency reserves held by commercial banks. This decision aligns with the broader economic environment, where the central bank has shown cautious optimism by keeping the policy rate unchanged in recent months amid easing inflation trends and improving fiscal indicators.
Maintaining a stable SCRA rate also helps ensure that banks can better manage the opportunity cost of holding mandatory foreign currency reserves with the central bank. For banks, the remuneration serves as a partial offset to the liquidity they park in the SBP, enhancing overall stability in foreign exchange liquidity management. In turn, this affects how banks price and manage their foreign currency deposit products offered to individuals and corporate clients.
This announcement comes at a time when market participants are closely watching the SBP’s upcoming Monetary Policy Committee (MPC) meeting scheduled for May 5, 2025. While the SCRA rate is a separate instrument from the benchmark policy rate, its management is reflective of the SBP’s broader approach to monetary and reserve operations. The consistency in this rate also provides a measure of predictability for financial institutions and investors alike, particularly in an environment marked by external vulnerabilities and fluctuating exchange rates.
The role of the Special Cash Reserve Account in Pakistan’s financial system is often understated but critical. It supports the central bank’s ability to manage external balances and uphold monetary discipline while enabling banks to continue offering foreign currency services in a regulated and safe environment. As Pakistan continues to engage with global financial institutions and works toward improving its balance of payments position, such regulatory instruments become increasingly important in maintaining investor confidence and financial market integrity.
With the rate holding steady at 3.32%, the SBP has effectively sent a message of continuity and caution—focusing on monetary discipline while supporting financial institutions in navigating ongoing macroeconomic challenges.