The State Bank of Pakistan conducted conventional reverse repo and Shariah compliant Modarabah based Open Market Operations on August 7, 2026, cumulatively injecting Rs3.27 trillion into the market. Of the total amount, Rs2.65 trillion was provided through conventional reverse repo operations, while the remaining Rs620 billion was injected through Shariah compliant Modarabah based operations. The latest liquidity operation was conducted to address funding requirements within the banking system and provide participating institutions with access to short term liquidity through the central bank’s established market operations framework.
Under the conventional Open Market Operation, the State Bank of Pakistan received offers amounting to Rs3.122 trillion across 10 day and 14 day reverse repo transactions and accepted Rs2.6566 trillion. For the 10 day tenor, Rs156.6 billion was offered and the full amount was accepted at an accepted rate of 11.54 percent. The 14 day operation received offers of Rs2.96565 trillion, against which Rs2.5 trillion was accepted at an accepted rate of 11.51 percent. The quoted rates for the 14 day operation ranged between 11.56 percent and 11.51 percent. The State Bank of Pakistan also accepted Rs1.11135 trillion on a pro rata basis from the total Rs1.577 trillion offered at the 11.51 percent rate.
The central bank also conducted a Shariah compliant Modarabah based Open Market Operation, through which Rs620 billion was injected into the Islamic banking system. Offers under the Shariah compliant operation totalled Rs657 billion, with Rs170 billion accepted for the 10 day tenor and Rs450 billion accepted for the 14 day tenor. The 10 day transaction carried an accepted rate of 11.55 percent, while the 14 day transaction was accepted at 11.52 percent. For the 14 day operation, total offers at the 11.52 percent rate amounted to Rs385 billion, of which the State Bank of Pakistan accepted Rs348 billion on a pro rata basis. The Shariah compliant operation therefore provided a separate liquidity channel for eligible Islamic banking institutions and specialised Islamic windows.
Open Market Operations are among the monetary and liquidity management tools used by the State Bank of Pakistan to inject or withdraw funds from the banking system according to prevailing liquidity requirements. In an injection operation, the central bank provides funds to banks and primary dealers against eligible collateral when there is a liquidity shortage in the financial system. Marketable government securities, including Market Treasury Bills and Pakistan Investment Bonds, are eligible collateral for conventional Open Market Operation injections. Through these transactions, the central bank can provide short term funding while accepting eligible securities as collateral.
The State Bank of Pakistan also uses Open Market Operations to manage excess liquidity when market conditions require funds to be withdrawn from the banking system. In a mop up operation, the central bank sells Market Treasury Bills to banks in exchange for funds, thereby reducing surplus liquidity. For Shariah compliant liquidity management, Bai Muajjal is available as a Shariah compliant instrument, with Government of Pakistan Ijara Sukuk serving as eligible securities. Banks and primary dealers can participate as counterparties in conventional Open Market Operations, while Islamic banks and specialised Islamic windows of conventional banks are eligible counterparties for Bai Muajjal transactions. The latest operation therefore combines conventional and Shariah compliant liquidity mechanisms to provide funding to different segments of Pakistan’s banking system.
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