Presentation on State bank of Pakistan
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Transcript of 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
DIFFERENCE BETWEEN COMMERCIAL BANKS AND CENTRAL 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
DIFFERENCE BETWEEN COMMERCIAL BANKS AND CENTRAL BANK
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
ROLE OF STATE BANK IN ECONOMIC DEVELOPMENT
ROLE OF STATE BANK IN ECONOMIC DEVELOPMENT
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.
ROLE OF STATE BANK IN ECONOMIC DEVELOPMENT
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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ROLE OF STATE BANK IN ECONOMIC DEVELOPMENT
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
FUNCTIONS OF CENTRAL BANK
METHODS OF NOTE ISSUE
1. Fixed fiduciary system
2. Proportional
reserve system
3. Minimum reserve system
FUNCTIONS OF CENTRAL BANK
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
FUNCTIONS OF CENTRAL BANK
Stable the credit money system
Balance of payment account
Leader of Capital Market
Controller of Foreign Exchange
FUNCTIONS OF CENTRAL BANK
Custodian of Metallic Reserve Gold, Silver as a reserve
Price Stability Inflationary and Deflationary pressure
FUNCTIONS OF CENTRAL BANK
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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FUNCTIONS OF CENTRAL BANK
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.
FUNCTIONS OF CENTRAL BANK
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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FUNCTIONS OF CENTRAL BANK
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.
FUNCTIONS OF CENTRAL BANK
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