The State Bank of Pakistan injected a large amount of liquidity into the banking system on Saturday, offering short-term funds to ease pressure in the market.
The central bank carried out both conventional and Shariah-compliant open market operations, injecting a combined Rs9.72 trillion. Most of the funds, around Rs9.096 trillion, were provided through reverse repo transactions, while Rs629.2 billion was injected using a Modarabah-based Shariah-compliant facility.
Majority of funds injected through reverse repo
In the conventional operation, the SBP accepted Rs9.096 trillion against an offer of Rs9.511 trillion. The largest portion came from a 14-day tenor, where banks sought over Rs9.51 trillion and the central bank accepted Rs9.095 trillion at a rate as low as 10.51 percent.
A smaller amount of Rs1.2 billion was injected for 10 days at a fixed rate of 10.55 percent.
The data showed strong demand from banks, with multiple bids submitted for both tenors. At the 14-day tenor, a significant share of bids was offered at 10.51 percent, with the SBP accepting a portion on a pro-rata basis.
Shariah-compliant injection adds further liquidity
Alongside the conventional OMO, the SBP also injected Rs629.2 billion through its Shariah-compliant window.
For the 10-day tenor, Rs356 billion was injected at rates between 10.62 percent and 10.58 percent. Another Rs273.2 billion was provided for 14 days at similar rates, showing stable pricing across Islamic liquidity operations.
How OMO supports the banking system
Open market operations are a key tool used by the SBP to manage liquidity in the banking system. When banks face a shortage of funds, the central bank lends money against government securities such as treasury bills and bonds.
In simple terms, these injections help banks meet their short-term funding needs and keep the financial system running smoothly.
On the other hand, when there is too much cash in the system, the SBP can absorb liquidity by selling securities.
For Islamic banks, similar support is provided through Shariah-compliant instruments, where sukuk are used instead of conventional interest-based securities.
The latest injection signals that liquidity needs in the market remained elevated, prompting the central bank to step in with substantial support.
Read next: SBP launches independent bank accounts for teenagers
