The State Bank of Pakistan (SBP) conducted a major Open Market Operation (OMO) on December 12, 2025, injecting a total of Rs10.48 trillion into the banking system. The bulk of the liquidity, amounting to Rs10.27 trillion, was provided through conventional reverse repo OMOs, while the remaining Rs214.7 billion was injected using Shariah-compliant Modarabah-based operations.
In the conventional segment, Rs10.13 trillion was injected for seven-day tenors at rates ranging from 11.01% to 11.07%, and Rs140.65 billion for 14-day tenors at rates between 11.02% and 11.08%. This reflects the SBP’s ongoing efforts to address liquidity shortages in the system, ensuring adequate funding for banks and primary dealers.
The Shariah-compliant Modarabah-based OMO injected Rs189.7 billion for seven-day tenors at an effective rate of 11.05%, and Rs25 billion for 14-day tenors at 11.06%. These operations are specifically designed to support liquidity in the Islamic banking sector, with eligible securities including GOP Ijara Sukuk, and counterparties limited to Islamic banks and specialized Islamic windows of conventional banks.
Open Market Operations are a key tool used by the SBP to manage liquidity in the banking system. In injection operations, the central bank lends funds to banks and primary dealers against eligible collateral, such as Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs), to address short-term liquidity needs. Conversely, in mop-up operations, the SBP sells MTBs to banks in exchange for funds to remove excess liquidity from the system.
The recent liquidity injection demonstrates SBP’s proactive approach in maintaining stability within Pakistan’s financial markets, ensuring that banks have access to adequate funding while supporting smooth functioning of both conventional and Islamic banking segments. By combining conventional and Shariah-compliant tools, the SBP continues to address the diverse liquidity requirements of the financial system, reinforcing market confidence and promoting efficient monetary management.
These operations also underscore the central bank’s dual focus on conventional and Islamic banking frameworks, highlighting the increasing integration of Shariah-compliant tools in Pakistan’s financial sector to ensure comprehensive liquidity management across all banking institutions.
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