The State Bank of Pakistan (SBP) has injected a total of Rs2.61 trillion into the banking system through a combination of conventional and Shariah-compliant Open Market Operations (OMO), according to official data released on December 5, 2025. This liquidity injection aims to address short-term liquidity shortages in the market and stabilize financial conditions.
The bulk of the infusion, totaling Rs2.43 trillion, was executed through conventional reverse repo OMOs. Under this facility, the SBP lent funds to banks and primary dealers (PDs) against eligible government securities, including Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs). The operation consisted of two tenors: a seven-day reverse repo worth Rs53 billion at an accepted rate of 11.03 percent, and a fourteen-day reverse repo totaling Rs2.38 trillion at a rate of 11.01 percent. These injections ensure that banks have sufficient liquidity to meet short-term operational requirements and maintain financial market stability.
In addition to the conventional OMOs, the SBP injected Rs173 billion through Shariah-compliant Modarabah-based OMOs. This mechanism, designed specifically for Islamic banking institutions and specialized Islamic windows of conventional banks, utilizes eligible securities such as GOP Ijara Sukuk to provide liquidity. For instance, the seven-day reverse repo under this structure injected Rs173 billion at a rate of 11.05 percent, offering Islamic banks a compliant means to access short-term funds while maintaining adherence to Shariah principles.
Open Market Operations, whether conventional or Shariah-compliant, are essential tools employed by the SBP to manage liquidity in the financial system. In an OMO injection, the central bank lends funds against eligible collateral to address shortages, whereas in OMO mop-up operations, the SBP sells securities to absorb excess liquidity. These operations play a vital role in ensuring smooth functioning of money markets, stabilizing interest rates, and supporting overall economic activity.
The SBP’s strategic use of both conventional and Shariah-compliant instruments reflects its commitment to maintaining liquidity across the entire banking sector, including Islamic banks. By providing timely funding through MTBs, PIBs, and GOP Ijara Sukuk, the SBP facilitates operational efficiency for banks and helps ensure financial market stability even amid fluctuating liquidity conditions.
Eligible counterparties for these transactions include conventional banks, primary dealers, Islamic banks, and specialized Islamic windows, ensuring broad participation and balanced liquidity distribution across the sector. This latest operation underscores the SBP’s proactive approach in monitoring money market conditions and deploying targeted interventions to support economic stability and growth.
Through these combined OMOs, the central bank has reinforced its role as a key stabilizer in Pakistan’s financial system, providing both conventional and Shariah-compliant liquidity solutions that cater to the diverse needs of the banking sector while upholding market confidence.
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