The State Bank of Pakistan conducted a combined conventional and Shariah-compliant Open Market Operation (OMO) on January 15, 2026, injecting a total of Rs358.5 billion into the banking system to address liquidity requirements. Out of the total, Rs203.5 billion was injected through conventional reverse repo OMO, while the remaining Rs155 billion was infused via Shariah-compliant Modarabah-based OMO.
In the conventional reverse repo operation, the State Bank offered and accepted Rs203.5 billion for a tenor of eight days, with the accepted rates ranging from 10.51% to 10.54%, settling at an effective rate of 10.51%. The operation was aimed at injecting liquidity into the market by lending funds to banks and Primary Dealers against eligible collateral, primarily marketable government securities such as Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs).
Simultaneously, the Shariah-compliant Modarabah-based OMO, designed specifically for the Islamic banking sector, injected Rs155 billion into the system for the same eight-day tenor at an accepted rate of 10.55%, with high and low quotes ranging between 10.55% and 10.56%. Eligible collateral for this operation included GOP Ijara Sukuk, allowing Islamic banks and specialized Islamic windows of conventional banks to participate and manage liquidity within the framework of Shariah principles.
Open Market Operations are a key monetary policy instrument 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 acceptable securities to address short-term liquidity shortages. Conversely, in OMO mop-up operations, the SBP sells government securities to absorb surplus liquidity from the system.
Through these operations, the SBP ensures smooth functioning of financial markets while maintaining stability in interest rates and overall monetary conditions. By employing both conventional and Islamic finance tools, the central bank can effectively manage liquidity across all segments of the banking sector while adhering to regulatory and Shariah-compliant frameworks.
The dual approach of combining reverse repo and Modarabah-based operations underscores the SBP’s commitment to providing robust monetary policy tools that cater to both conventional and Islamic banking institutions. These injections support lending, economic activity, and short-term market stability, particularly amid fluctuations in liquidity demand across the banking system.
Eligible counterparties in conventional OMO injections include all banks and Primary Dealers, whereas for Shariah-compliant Bai Muajjal operations, only Islamic banks and specialized windows of conventional banks are allowed to participate. The operations highlight the central bank’s proactive approach in balancing liquidity management while facilitating smooth financial market functioning and accommodating the unique needs of Pakistan’s growing Islamic banking sector.
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