Presentation on State bank of Pakistan

THE ROLE OF CENTRALBANK IN ECONOMIC DEVELOPMENT OF PAKISTAN

GROUP # 7

Members1. Syed Usman Roll no.662. Mariyam Jahangir Roll no.23. Sana Maqsood Roll no.404. Rida Akbar Roll no.355. Aiman Zubair Roll no.526. Muhammad Wasif Roll no.387. Sadia Altaf Roll no.28

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INTRODUCTION & HISTORYSYED USMAN

THE CENTRAL BANK OF ENGLAND (HUB OF BANKING)

HISTORY

STATE BANK OF PAKISTAN

DEFINITION:

State bank is an institution that manages a state’s currency,

money, supply and interest rates.

HISTORY At the time of Independence At the time of Partition Financial crisis in Pakistan Making of state bank

Effect of Central Bank On Economic Development

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Departments of Central Bank of Pakistan

THE CENTRAL BANK OF PAKISTANMARYAM JAHANGIR

STATEMENTS OF SBP

Statements of SBP

Mission Statement

Vision Statement

MISSION STATEMENT: To promote Monetary and Financial stability To achieve equitable Economic Growth and

Prosperity To provide excellent Banking and Financial

services to stakeholders

VISION STATEMENT: Vision Statement: “To develop SBP into a dynamic and efficient

organization equipped with requisite technology and human resource capable of extending sustainable support to the State Bank of Pakistan in achieving its objectives”

STRUCTURE OF CENTRAL BANK OF PAKISTAN:

•Central Board of DirectorsHigh level of

management•Central DirectorsMiddle Level

of Management

•Field OfficeLow Level of Management

CENTRAL BOARD OF DIRECTORS

Governor (1) Deputy Governors (1) Directors (8)

FIELD OFFICE The head Office of Bank is in Karachi.

GOVERNOR First Governor of SBP

Zahid Hussain

EXISTING GOVERNOR

Yaseen Anwar

DIFFERENCE BETWEEN COMMERCIAL BANKS AND CENTRAL BANK

Difference

Central Bank

Commercial Bank


1. OWNERSHIP

• Owned by the State

• Owned by the private sector

2. AUTHORITY

• Control Commercial banks

• Subordinate to Central Bank

3. NOTE ISSUNCE POWER

• Can issue currency note

• Cannot issue currency note


4.GOVERNING ACT

• SBP ACT 1956

• Banking Companies Ordinance 1962

5. CREDIT CONTROL

• Can control Credit

• Bound to obey SBP’s advice on credit control

6. PROFIT MOTIVE

• Non Profit oriented Organization

• Profit oriented Organization

ROLE OF STATE BANK IN ECONOMIC DEVELOPMENT OF PAKISTANSANA MAQSOOD

ROLE OF STATE BANK IN ECONOMIC DEVELOPMENT

Establishment of New Books Establishment of New Banks For the Rapid

Growth In the Economy

Training Of The Bankers Training of the workers and the Executives

“Institute OF Bankers”

Establishment OF Stock Exchange In 1950 SBP Established Stock Exchange In

Karachi Development of Investment opportunities in

Pakistan



Establishment OF Special Financial Institutions

Establishment of special Institutions IDBP, ZTBL,PICIC

To increase financial Requirements

Equal Distribution Of Loan Distribution OF Funds And Loans Equally

among Different Sectors Equal development through Equal Loans Like

Industry, agriculture and commerce etc.


Export Financing Scheme Exporters are given Exclusive Loans to

Increase Exports

Measures to Increase Saving SBP Issues Prize Bonds to develop the habit

of saving Introduction of different schemes

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Establishment Of Export Promotion Bureau

Export Promotion Bureau was established Its objects are to increase the quality of

products To increase the exports of the country

FUNCTIONS OF CENTRAL BANKRIDA AKBAR

FUNCTIONS OF CENTRAL BANK

1. Sole monopoly of note issue:

Regulation of currency

undue expansion of notes

notes issued liability


METHODS OF NOTE ISSUE

1. Fixed fiduciary system

2. Proportional

reserve system

3. Minimum reserve system


BANKERS BANK Custodian of cash reserve

Clearing house

Lender of last resort

Re-discounting

Opening of new bank

Advance policy

FUNCTIONS OF CENTRAL BANKAIMEN ZUBAIR


Stable the credit money system

Balance of payment account

Leader of Capital Market

Controller of Foreign Exchange


Custodian of Metallic Reserve Gold, Silver as a reserve

Price Stability Inflationary and Deflationary pressure


Banker to the Government

Keeping the Deposits

Advances Loans

Foreign Loans

Keeping of Accounts

Transfer of Capital

Financial Advisor

Govt. Securities

CUT THIS SLIDE Banker to the Government: The functions of the central bank as bankers to the government are as following: Keeping the Deposits: The central bank keeps the deposits of the central and provincial governments.It makes

makes payments on the behalf of government. Advances Loans: As a fiscal agent,the central bank provides loans to the government and makes

investments in treasury Bills and Long-term Government securities. Foreign Loans: Central Bank transefers the capital of central and provincial governments from one place

to another. Financial Advisor: The central bank also advices the government on economic matters such as controlling

inflation or deflation of currency. Keeping of Accounts: The central bank keeps the accounts of different departments of govt.It does not charge

any fee or commission. Govt. Securities: Central bank is not only the custodian of govt securities;but also works for their sale and

purchase. Trasfer of Capital: Central bank trasfers the capital of centrl and provincial governments from one place to

another.

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Bankers Bank

• Custodian of Cash Reserve

• Clearing House• Lender of last Resort• Re-Discounting of Bills of Exchange

• Opening of New Banks• Advance policy• Growth of Banks

CUT THIS SLIDE Bankers Bank: As a banker for the commercial banks ,the central bank performs the following functions: Custodian of Cash reserves: The commercial banks are required by law to keep reserves equal to a certain percentage of

both time and demand deposit with central bank. Clearing House: As a bankers bank, the central bank acts as a clearing house for the settlement of mutual

claims of commercial banks.Since the central bank central bank holds reserves of commercial banks,it transfers funds from one bank to another to facilitate the clearings of cheques by making entries on the principles of bookkeeping without using cash.

Lender of last resort: The central bank lends to the member or scheduled banks in times of stress to save their

financial structure. Re-Discounting: The member commercial banks can re discount their bills from central bank in time of need. Opening of New Bank: A new bank or a branch of an existing bank cannot be established without the prior

permission of central bank. Advance policy: Central bank regulates the policies of advancing loans for commercial banks and fixes the

rate of intrest to be charged. GROWTH OF BANKS: It is the duty of central bank to promote the growth of the banking system on sound footing.


Leader of Capital Market:

SBP is considered as the leader or guardian of Capital Market because it works for the establishment and growth of the capital market. It also makes policies and take decisions to avoid the expansion and contraction of credit money and to establish the credit money system of our country.SBP has played a very effective role in improving the capital market.

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Custodian of Metallic Reserve:

The SBP is a supervisor or custodian of metallic reserves for eg: Gold and Silver of our country.It keep them with great care and safety.The metallic metallic reserve of commercial banks and other financial institutions are also done the same.


International Representative

Investments in International market

Credit Control

Monetary policy

MONETORY POLICY MUHAMMAD WASIF

WHAT IS MONETARY POLICY The term monetary policy refers to actions

taken by central banks to affect financial conditions

Monetary Policy operates variables such as money supply, interest rates and availability of credit.

DEFINITION

Monetary policy determines the amount of money that flows through the economy.”(Chad Brooks)

Monetary Policy is concerned with deciding

how much money the economy should have or perhaps more correctly deciding whether to increase or decrease the purchase power of money ( Hanson)

AIMS/OBJECTIVES OF MONETARY POLICY

The Goals of monetary policy are to promote maximum employment, stable prices and moderate long-term interest rates

The core objectives of Pakistan’s monetary policy are to control inflation, maintaining price stability, strong monetary growth and achieving maximum employment rate

AIMS/OBJECTIVES OF MONETARY POLICY

Exchange Stability Control of Inflation and

Deflation Economic Development Increase in the Rate of

employment improvement in Standard of

Living

METHODS OF CREDIT CONTROL

Methods

1) Quantitative

methods

2) Qualitative methods

METHODS OF CREDIT CONTROL

Quantitative methods

• OPEN MARKET OPERATIONS• Bank rate policy• Cash and reserve

requirements• Credit rationing • Interest rate policy• Change in margin

Qualitative Methods

• Advertisement• Moral persuasion• Change in margin• Direct Action

QUANTITATIVE METHODS

“To accomplish its monetary policy objective, the Central Bank can use a mix of

quantitative and qualitative tools to influence the supply and demand of money”

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QUANTITATIVE METHODS Open Market Operation

Sale and purchase of government securities by central bank

Bank Rate Policy Rate at which bank re-discounts the first class bills of

exchange of commercial banks

Cash and Reserve Requirements Increase or decrease the reserve ratio of commercial

banks

Credit rationing Central bank put limits on the grant of credit on

commercial bank

MONETORY POLICYSADIA ALTAF

QUALITATIVE METHODS

The selective measures of credit control Wants to reduce Credit Supply Only Certain require sectors of the economy

are affected

QUALITATIVE METHODS

Advertisement Moral persuasion Change in margin Direct Action

AUTONOMY OF STATE BANK OF PAKISTAN

The right or condition of self-government. a self-governing country or region. freedom from external control or influence;

independence.

AUTONOMY OF STATE BANK OF PAKISTAN

Full Independence To State Bank Strong Internal Control Implementation Of Monetary Policy Responsible for Setting the discount Rate

PROBLEMS OF SBP IN ECONOMIC DEVELOPMENT Inflation and Deflation Change in Governors Balance Of Payment Relation With International Agencies Poor banking Structure

CONCLUSION ABOUT SBP

Unique Position in our economy Unique position financial Infrastructure

Presentation on State bank of Pakistan

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