Functions Of State Bank In Pakistan
Functions
The state bank of Pakistan performs the same functions as any central bank of a developing country. It has traditional and developmental functions, and its aim is to achieve macro-economic goals.
The Traditional Functions
The traditional functions performed by the state bank of Pakistan can be classified in two groups, which are
I. The Primary Functions
The primary functions of the state bank include regulation and supervision of the financial system, issuing of notes, and conduct of monetary policy. They also include the functions of state bank as the banker’s bank, the lender of the last resort, and the banker to government.
Sole Authority to Issue Notes
One of the primary functions of the state bank of Pakistan is the regulation
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II. The Secondary Functions
The secondary functions of the state bank include the agency functions. The agency functions include functions like management of public debt, management of foreign exchange, and other functions like the maintaining close relationships with international financial institutions, and advising the government on policy matters.
Public Debt Management
The actions involved in the public debt management are: subscribing securities to Federal and Provincial government, sale or purchase of securities in the money market, payment of interest to holders of public debt instruments.
Management of Foreign Exchange
The State Bank is responsible for maintain the external value of Pakistan’s currency. As the State Bank is an agent to the government, it is authorized to purchase and sell gold, solver or foreign exchange. The bank is also responsible to keep the exchange rate of Pakistani rupee at a desirable level and prevent too much fluctuations in
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The acts of the State Bank which lead to the development of the banking system are: the promotion of commercial banking, promotion of micro finance, and promotion of Islamic Banking.
Training Facilities to Bankers
The State Bank introduced “Bank Officers Training Scheme” within one month of its establishment, due to the acute shortage of trained bankers at the time of independence.
Development of Specialized Financial Institutions
The Bank have actively participated in setting up numerous specialized credit institutions, which were designed to meet the medium and long term financing needs of the various sectors of the economy. These institutions include Pakistan Industrial Credit and Investment Corporation of Pakistan (PICIC), Industrial Development Bank of Pakistan (IDBP), National Development Finance Corporation (NDFC), Agricultural Development Bank of Pakistan (ADBP), Federal Bank for Corporatives (FBC) and House Building Finance Corporation (HBFC). All these institutions were formed for the provision of credit to different sectors.
Credit to Priority
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