KARACHI: The State Bank of Pakistan (SBP) injected a cumulative Rs869 billion into the banking system on Friday through conventional reverse repo and Shariah-compliant modarabah-based Open Market Operations (OMOs), aiming to ease short-term liquidity constraints in the financial sector.
According to the results published by the central bank, Rs578.65 billion were injected via the conventional reverse repo mechanism. Of this amount, Rs223.65 billion was accepted for a 7-day tenor at a cut-off rate of 11.08%, while Rs355 billion was accepted for a 14-day tenor at 11.05%.
In parallel, the SBP conducted a Shariah-compliant OMO, injecting an additional Rs291 billion into the Islamic banking system. This included Rs145.2 billion for a 7-day tenor at 11.09% and Rs145.8 billion for a 14-day tenor at 11.10%.
The SBP routinely uses OMOs to manage short-term liquidity in the banking system, either by injecting funds (reverse repo/injection) when liquidity is tight or mopping up excess liquidity (repo/sale) when the market is flush with cash.
In conventional OMOs, the SBP lends to commercial banks against collateral in the form of marketable government securities, including Market Treasury Bills (MTBs) and Pakistan Investment Bonds (PIBs). For Shariah-compliant OMOs, the central bank uses modarabah or bai-muajjal structures with GOP Ijara Sukuk as eligible collateral, catering specifically to Islamic banks and Islamic windows of conventional banks.
Today’s injection comes amid ongoing monetary tightening and cautious liquidity management as the SBP seeks to balance inflation control with economic stability. The rates for the OMOs indicate moderate short-term borrowing costs in line with prevailing monetary policy settings.
