The State Bank of Pakistan (SBP) has conducted a substantial liquidity operation, injecting a combined Rs13.4 trillion into the financial system through its latest Open Market Operations (OMOs). The injection, carried out on Friday, is aimed at alleviating liquidity pressures faced by banks and maintaining smooth operations across the money market.
According to detailed results released by the central bank, the bulk of this liquidity—approximately Rs13.04 trillion—was provided through conventional reverse repo OMOs. Under this arrangement, the SBP lent funds to banks and primary dealers against eligible government securities, primarily Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs), to address short-term liquidity needs in the banking system.
Breaking down the numbers, the seven-day tenor reverse repo operations saw an acceptance of Rs1.48 trillion at an accepted cut-off rate of 11.03 percent. Meanwhile, the fourteen-day tenor received the lion’s share of liquidity, with Rs11.55 trillion accepted at the same rate, reflecting continued demand by market participants to stabilize short-term funding requirements.
In parallel, the SBP also conducted Shariah-compliant liquidity injections through Modarabah-based OMOs, targeting Islamic banks and specialized Islamic windows of conventional banks. Through these operations, a total of Rs361.64 billion was injected into the system. The central bank accepted Rs196.6 billion under a seven-day tenor at a rate of 11.11 percent and Rs165 billion under a fourteen-day tenor at 11.10 percent.
These liquidity management operations underscore SBP’s dual approach in catering to both conventional and Islamic banking sectors, ensuring that liquidity shortfalls do not disrupt financial market stability. Under the conventional framework, eligible counterparties pledge marketable government securities in exchange for short-term funds. Conversely, in Shariah-compliant transactions like Bai-Muajjal or Modarabah arrangements, GOP Ijara Sukuk serve as collateral, aligning with Islamic finance principles.
Open Market Operations remain one of the SBP’s core monetary policy instruments to regulate liquidity in the system. Through OMOs, the central bank can either inject funds—when there is a shortage of liquidity—or mop up excess liquidity to maintain orderly money market conditions. In today’s injection mode, the operations indicate that the central bank observed tighter liquidity within the banking sector, prompting a substantial easing measure.
This strategic move comes at a time when Pakistan’s financial sector is navigating multiple economic challenges, including balancing inflationary pressures and ensuring sufficient liquidity to support lending and economic activities. By deploying these significant injections, the SBP aims to keep short-term interest rates aligned with its monetary policy stance and avoid disruptions in payment and settlement systems.
Going forward, market participants and analysts will closely monitor the SBP’s liquidity management actions, especially as demand for credit evolves across various sectors of the economy. The sizeable injections also highlight the central bank’s continued readiness to intervene actively to support both conventional and Islamic segments of Pakistan’s growing and diverse banking ecosystem.