stastate bank of pakistan
TRANSCRIPT
Project
State Bank of Pakistan
SBP Project by ASH GOVT. COLLEGE OF SECINCE
Table of Contents
Course Coordinator _________________________________________________________________________________ 3
Project Associates ___________________________________________________________________________________ 4
Outline _________________________________________________________________________________________________ 5
Introduction ___________________________________________________________________________________________ 6
Governor of State Bank ______________________________________________________________________________________ 6
Functions of State Bank of Pakistan _________________________________________________________________ 7
Primary Functions ___________________________________________________________________________________________ 7
Secondary Function _________________________________________________________________________________________ 10
Departments of State Bank _________________________________________________________________________ 11
Agricultural Credit Department ____________________________________________________________________________ 11
Domestic Market & Monetary Management Department ________________________________________________ 12
Banking Inspection Department ___________________________________________________________________________ 13
Human Resource Department ______________________________________________________________________________ 14
Information Technology Department ______________________________________________________________________ 15
Litigation Department ______________________________________________________________________________________ 15
Finance Department ________________________________________________________________________________________ 16
Statistics and Research Department _______________________________________________________________________ 17
Islamic Banking Department _______________________________________________________________________________ 18
Audit Department ___________________________________________________________________________________________ 19
Conclusion ___________________________________________________________________________________________ 20
COURSE COORDINATOR
3
Course Coordinator
roject Objectives
Because of the following reasons, I prefer this project work to get the knowledge of the
banking system.
Banking is an essential industry.
It is where we often wind up when we are seeking a problem in financial crisis and
money related query.
Banking is one of the most regulated businesses in the world.
Banks remain important source for career opportunities for people.
It is vital system for developing economy for the nation.
Banks can play a dynamic role in delivery and purchase of consumer durables.
BASHARAT RAZA
Lecturer
Govt. College of Science
P
PROJECT ASSOCIATES
4
Project Associates
ABDUL RAUF SHAKIR
SHAHBAZ HUSSAIN HASNAIN RAUF RAO
Bachelor in business Administration
Roll no: 54
Bachelor in business Administration
Roll no: 06
Bachelor in business Administration
Roll no: 50
Govt. College of Science
Wahdet Road Lahore
www.gcslahore.edu.pk
OUTLINE
5
Outline
1) Introduction
2) Functions of SBP i) Primary functions
ii) Secondary functions
3) Departments under SBP i) Introduction
ii) Functions
iii) Objectives
Conclusion
INTRODUCTION
6
Introduction
The State Bank of Pakistan ( بینک دولت پاکستان) is the central bank of Pakistan which was formed
on 1st July 1948. While its constitution, as originally laid down in the State Bank of Pakistan Order
1948, remained basically unchanged until January 1, 1974, when the bank was nationalized, the
scope of its functions was considerably enlarged. The State Bank of Pakistan Act 1956 with
subsequent amendments, forms the basis of its operations today. The headquarters are located in the
financial capital of Pakistan, Karachi with its second headquarters in the capital, Islamabad.
Governor of State Bank Mr. Ashraf Mahmood Wathra has been appointed as Governor, SBP with effect from April 29,
2014, for a period of 3 years
FUNCTIONS OF STATE BANK OF PAKISTAN
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Functions of State Bank of Pakistan
State bank of Pakistan plays an important role in the process of economic development with
the help of its function which are primary and secondary functions.
Primary Functions
1. Issue of Notes
State bank of Pakistan has monopoly in issuing currency notes. 5, 10, 50, 100 rupee notes are
issued by the bank on 12 July 1976. Note of 500 rupee was issued on 1st April 1986 and 1000
rupee note was issued on 18th July 1987. At present note of Rs.5000 is also issued by the state
bank of Pakistan. The state bank has three offices of issue, situated at Karachi, Lahore and
Peshawar. There are three methods of note Issuance which are.
2. Fixed Fiduciary Method
Under fixed fiduciary method the government fixes a fixed amount of notes without
keeping any metallic reserve. But this portion of currency must be backed by government
securities, which is called fiduciary limit. The notes issued other than fiduciary limit must be
fully backed by gold or silver reserves.
3. Proportional Reserve System
Under this system the central bank is required to keep only a certain percentage of note
issued in the form of gold and silver. The reserve proportion is usually from 30% to 40%. It means
a central bank can issue rupees Rs.100 note after keeping gold or silver valuing Rs.30 or 40.
4. Minimum Reserve System
Fixed minimum reserve system allows the central bank to keep only a fixed amount of
reserve against whatever the amount of note issue.
5. Banker to the Government
It is the bank of federal as well as provincial government. Its functions for the Govt. are;
Bank issued new notes on the behalf of government.
Bank also accepts the government cheques and drafts.
FUNCTIONS OF STATE BANK OF PAKISTAN
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State bank responsible for transferring government funds at international level .
Bank arranges the public debts of federal and provincial government.
Bank receives no commission form the government.
It holds federal and provincial government securities.
State bank is liable for the payment of salaries and pension to government employees .
6. Banker’s Bank
State bank of Pakistan is the bank of all commercial banks working in Pakistan. SBP started
to spend $ 24.00 million in October 2002, with the assistance of World Bank for data
warehousing, networking, application of software and other banking solutions.
State bank provides loans to commercial banks at the time of need
Commercial banks re-discount their bills of exchange from state bank
State bank can sell, purchase and hold debentures of any banking company or of any other
financing corporation.
7. Clearing House
State bank of Pakistan acts as the clearing-house for the commercial banks working within
the country.
It shows the financial position of various banks
Clearing-house helps commercial banks to settle inter-bank transactions
It reduces the excessive use of cash
It controls the harmful competition among banks
8. Advisor to Government
State bank of Pakistan works as an advisor to federal and provincial government.
It guides the government in financial and economic matters
State bank assists the government in various credit schemes
It informs the government about the monetary and fiscal situations of economy
State bank helps the government in making investments
9. Lender of Last Resort
The state bake of Pakistan also acts as the lender of the last resort for the commercial banks.
When commercial banks are in crisis and have shortage of cash, then state bank comes to their
help. State bank may help the commercial banks by rediscounting their bills of exchange and by
advancing loans against securities.
FUNCTIONS OF STATE BANK OF PAKISTAN
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10. Controller of Credit
A national credit consultative council was setup in 1972 for the purpose of monitoring and
controlling credit. Credit and investment are the most important economic and fiscal variable.
State bank helps to arrange the credit and investment facilities. State bank has adopted following
tools to control credit:
Open market operation
Bank rate policy
Changes in reserves ratio
Changes in margin requirements
Change in liquidity ratio
Moral persuasion and publicity
FUNCTIONS OF STATE BANK OF PAKISTAN
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Secondary Function
1. Debts Management
Our scarce resources and government policies are not able to run the mega projects which
needed heavy amount of resources. Due to shortage of resources government has to depend upon
other rich nations. All these arrangement are the responsibility of the state bank on the behalf of
government.
2. Foreign Exchange Reserves
State bank of Pakistan is also the custodian of gold, silver and foreign exchange reserves. It
regulates foreign exchange reserve in accordance with foreign exchange Act 1947. Pakistan has
shortage in foreign exchange reserves. Its volume of foreign exchange reserves is only $12.34
billion in 2007-08. In July 2007, foreign exchange reserves were $15.646 billion out of which
state bank of Pakistan has $ 4.3213 billion. At present foreign exchange reserves of Pakistan are
$ 17.1 billion.
3. Exchange Centre
State bank issued licenses to different commercial banks to hold foreign exchange. Such
license holders can also deal in foreign exchange at authorized rates. These exchange centers are
very helpful in mobilizing the resources.
4. International Relations
State bank of Pakistan maintains relations with different international financial institutions
such as IMF, WBG, etc. It negotiates different contracts with these institutions on the behalf of
government.
5. Economic Information
State bank collects the information all over the country and world throughout the year. It also
annually published its report, which is an extremely important document. This exact information
is very helpful in making economic planning which is necessary for the economic development.
DEPARTMENTS OF STATE BANK
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Departments of State Bank
There are different departments under the State Bank of Pakistan which can be defined
briefly. Following are the main departments which carried out under the control of State Bank
of Pakistan.
1. Agricultural Credit Department.
2. Domestic Market & Monetary Management Department.
3. Banking Inspection Department.
4. Human Resource Department.
5. Information Technology Department.
6. Litigation Department.
7. Foreign Exchange and debt Department.
8. Statistics and Research Department.
9. Islamic Banking Department.
10. Audit Department
Above said departments are controlled and managed by State Bank of Pakistan and can be
explained briefly as.
Agricultural Credit Department
Introduction
Established under Section 8(3) of SBP Act 1956, is mainly responsible to meet credit needs
of agriculture that being the mainstay of Pakistan’s economy generates nearly one fourth of the
total output and 44% of total employment and is the major source of foreign exchange earnings.
Functions
Followings are the functions performed by the agricultural credit department under the
control of State Bank of Pakistan.
DEPARTMENTS OF STATE BANK
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Assessment of Credit needs
Agricultural credit department simply assess the need of credit in agricultural sector as well
as rural area to utilize the maximum output. That is the main function performed by the
agricultural credit department.
Formulation of Agricultural finance polices
Agricultural credit department formulate polices regarding agricultural and rural credit and
make implementation of these policies and procedures to a better extent.
Building Agricultural finance capacity
Agricultural credit department build the finance capacity of State Bank of Pakistan with the
use of appropriate resources. Agriculture department itself mange reserve which is used to
finance the agricultural needs.
Analysis of Agricultural finance need
Agricultural credit department conduct an analysis by using the financial data to allocate the
need of finance in a specific segment.
Advise to Govt. & other financial institutions
Agriculture credit department also gives advises to local and provincial government as well
as financial institutions to strengthen the agriculture sector in Pakistan.
Domestic Market & Monetary Management Department
Introduction
DMMMD is a newly constituted department of SBP. The idea of constitution of this
department was to manage the money market activates under one roof.
Functions
Followings are the functions performed by the Domestic Market & Monetary Management
Department under the control of State Bank of Pakistan.
Exchange Rate policy management
Exchange rate policy management is a key function performed by the Domestic Market &
Monetary management department. Discount and exchange rate defined by the state bank of
Pakistan is carried out by the said department in operation market.
DEPARTMENTS OF STATE BANK
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Monetary policy implementation
Monetary policy is a well-known function performed by the central bank and
implementation of these measures are carried out by the said department. If any of commercial
bank fail to meet the monetary policy requirement the said department make a deal with it.
Reserve Management
Reserve generated for operational and foreign purposes are managed by the Domestic market
& monetary management department.
Debt Management
Well DMMMD deals with all domestic and international debts therefore management and
generation of the debts carried out by that department.
Banking Inspection Department
Introduction
Banking Inspection Department (BID) is one of the core departments at SBP. Its mission is
to strive for soundness & stability of the financial system and safeguard interest of stakeholders
through proactive inspection, compatible with best international practices.
Functions
Followings are the functions performed by the Banking Inspection Department under the
control of State Bank of Pakistan.
Assessment of financial institution
BID plays a pivotal role in meeting the SBPs main responsibility of supervising the financial
institution to maintain soundness of the system and protection the interest of depositors, thereby
ensuring public confidence in the system.
Assessment of risk & policies
Here the focus of inspection is generally on risk assessment policy and procedure of the banks
and control environment to keep attach risks within acceptable limits and compliance with laws,
regulations and supervisory directives.
On-site examination
The regular on-site inspection is conducted on the basis of CAMELS Framework. (Capital,
Asset Quality, Management, Earnings, Liquidity, Sensitivity and System & Controls). CAMELS
DEPARTMENTS OF STATE BANK
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is an effective rating system for evaluating the soundness of financial institutions on a uniform
basis and for identifying these institutions requiring special attention or concern.
Preparation of statuary reports
Beside the regular inspection report, BID also prepares statutory reports under Section 25-AA
of the Banking Companies Ordinance 1962 for banks regarding written-off loans, mark-up and
other dues, or financial relief through rescheduling & restructuring of loans, on yearly basis and
is submitted to Federal Government.
Human Resource Department
Introduction
Human resource management is a function in organizations designed to maximize employee
performance in service of their employer’s strategic objectives. HR is primarily concerned with
how people are managed within organizations, focusing on policies and systems.
Functions
Followings are the functions performed by the Human resource Department under the
control of State Bank of Pakistan.
Recruiting employees
Human resource department recruit the best qualified candidate within the organization
as well as outside the state bank of Pakistan.
Encouraging employees
Same as the other departments human resource department perform efficient its function
and encourage the employees in their respective field.
Employees’ relations
Human resource department plays a vital role to build the employees’ relation with the
firm as well as fellows.
Succession planning and development
Appraisal forms are maintained to judge the performance of employees in their relative
work. With the help of these forms and on job performance succession planning occurs and also
these measures taken by the HRD.
DEPARTMENTS OF STATE BANK
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Information Technology Department
Introduction
ITD with its capabilities, methodologies and experience aims at technological
advancement in SBP. Focusing on solution that intend to reduce operating cost, improve end
user and meet overall business goals.
Functions
Followings are the functions performed by the Information Technology Department
under the control of State Bank of Pakistan.
Technological advancement
Information technology department plays a vital role in the advancement of technology
and digital view of the State Bank of Pakistan.
High quality solutions and services
ITD provides solution to other departments in the field of Information technology.
And assemble the information of other departments in a digital hub.
Effective communication
ITD builds effective communication between all departments in terms of technological
effect which is helpful to gain timely information at end spot.
Smooth 24/7 operations
Generally it’s a services which is provided by the Information technology department to
State bank of Pakistan to provide help in the field of operations.
Litigation Department
Introduction
Litigation is the process of taking a case through court. The litigation or legal process is
most common in civil lawsuits. Litigation department perform all functions related to law suits,
defense and appeals by the state Bank of Pakistan in its Operations.
Functions
DEPARTMENTS OF STATE BANK
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Followings are the functions performed by the Litigation Department under the control
of State Bank of Pakistan.
Defense of suits
Litigation department perform measures against the suits which are filed by the outsider
as well as members of State Bank of Pakistan in its operations.
Measures against suits
It includes documentations, preparation of reports and furnishing of solicitor against the
suits which is expected to face. It is also a main function of litigation department to ensure that
every this is working exactly according to Law of the state as well as Central Bank.
Settlement of legal issues
Litigation Department generated for the settlement of legal issue in the field of operation
without effecting any part of the Business. This department make other department work
efficiently according to the constitution of Central bank.
Registration of Rules
Litigation department check the rules and regulations before there implementation to
ensure that every single rule have ethical value to be forced at law. It is gives the specification to
registration process regarding rules of Law.
Finance Department
Introduction
Finance Department is a department that manages its money. The business functions of a
finance department typically include planning, organizing, auditing, accounting for and
controlling its finances. The finance department also usually produces the financial statements.
Functions
Followings are the functions performed by the Finance Department under the control of
State Bank of Pakistan.
Maintenance of books of accounts
Its main function is Maintenance of Books of accounts and preparation of financial
statements of the bank in accordance with the international accounting standards as adopted by
the Bank.
Budget planning
DEPARTMENTS OF STATE BANK
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Finance department usually coordinate and facilitate in the business planning and
budgeting measures with the help of periodic reports to the management and to its board.
Maintenance of foreign currency accounts
Maintenance of foreign currency account, investments and execution of international
payments and receipts are also performed by the finance department of Central bank.
Currency issuance
It is the function of finance department to issue the currency and overall management .
Management of Donor Accounts
Finance department gives Maintenance of accounts related to international organizations
and donor agencies like international monitory fund, Asian development bank, Asian clearing
union etc.
Statistics and Research Department
Introduction
Statistics and research department under the state bank of Pakistan assumes an important
role by providing key inputs for economic policy formulation through its analytical reviews and
research work. Clearly, superior analysis of economic policy would be reflected in sounder
macroeconomic management by the State Bank.
Functions
Followings are the functions performed by the statistics and research Department under
the control of State Bank of Pakistan.
Analysis of economic policies
Statistics and research department analyses the economic policies, set and carried out by
economics policy department to ensure the impact of policy on the domestic as well as
international market.
Analysis of economic indicators
Analysis of economic indicators also performed by the statistics and research department
to give change in the policies.
Presenting the effective results
Statistics and research department present the results from the research to management
and to its board so that the effective steps should be taken quickly.
DEPARTMENTS OF STATE BANK
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Analysis of operational soundness
Statistics and research department usually conduct study to analyses that is organization
working efficiently? Is organization working according to the policies and procedures? Etc.
Islamic Banking Department
Introduction
Islamic banking department was established on 15th September, 2003 and has been
entrusted with the huge task of promoting & developing the shariah compliant Islamic banking
as a parallel and compatible banking system in the country.
Functions
Followings are the functions performed by the Islamic Banking Department under the
control of State Bank of Pakistan.
Supervision of Islamic Banks
Islamic Banking Department plays vital role in the supervision of all Islamic banks in the country.
All listed and registered Islamic banks under the state bank of Pakistan are supervised and managed by
the department particularly.
Introduction of Islamic tax, Zakat
It is also a main function performed by the Islamic banking department to introduce tax and Zakat
policy according to Islamic shariah.
Policies compliance with Islamic shariah
Islamic Banking department makes policies and procedures for the Islamic banking system which
is compliance with the Islamic shariah and context to Islam.
Advancement of Islamic banking
Advancement in the field of Islamic banking system is also a function which is carried out
by the Islamic banking department. This department not only direct the Islamic banks but also
gives them way to flourish their work.
DEPARTMENTS OF STATE BANK
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Audit Department
Introduction
Audit Department is a Department under the State Bank of Pakistan which examines and
evaluate whether the SBP’s frame work of risk management, control, and governance processes,
is adequate and functioning properly.
Functions
Followings are the functions performed by the Audit Department under the control of
State Bank of Pakistan.
Financial Audit
Audit Department’s main function is to conduct financial audit of different banks proposed by the
State Bank of Pakistan. All registered banks are not supposed to be audited but any bank under the eye
of central bank can be audited any time for the interest of general public.
Operational Audit
Operational Audit is also a function of Audit department in the organization. It examines that the
all operations are carried out according to rules and regulation.
Management Audit
Audit department also exams the management contribution in the affair of business of state bank
of Pakistan as well as member banks to ensure the soundness of operations.
Audit of Internal Control
Internal control is a system generated by a bank itself to manage all the operation of the bank to
check and maintain the job as it should be, and audit department gives it look to some extent which
become its function.
CONCLUSION
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Conclusion
All above points are showing that state bank of Pakistan has an important
position in our economic and financial infrastructure. Without an effective role of state bank,
economic development is impossible.
Good Luck