The State Bank of Pakistan (SBP) injected liquidity valuing Rs18.6 billion into the banking system on Monday.
According to data released by the SBP’s Domestic Markets and Monetary Management Department, the central bank conducted an open market operation (injection), which resulted in acceptance of the amount of Rs18.6 billion.
The tenor of the open market operation is four days, with the accepted rate of return at 9.93% per annum.
The SBP has injected a cumulative Rs399.2 billion in five separate open market operations since the beginning of 2014-15 in July.
The heavy injection into the banking system in the last month was mainly due to the liquidity shortage that commercial banks faced in view of Ramazan. People withdrew cash from their bank accounts for Eid shopping in large quantities and also sought fresh currency notes.
To meet the high demand for currency notes, the SBP issued new bills worth Rs154 billion before Eid. About Rs31 billion, or 20% of the total issue, consisted of lower denomination notes of up to Rs100, according to a separate SBP statement released on Monday.
Currency notes of higher denomination worth Rs123 billion were issued for meeting ATM needs of commercial banks. Last year’s total issue of new currency notes stood at Rs139 billion, which translates into a year-on-year increase of 10.8%.
“The SBP Banking Services Corporation (BSC) fully utilised the extensive network of commercial bank branches across the country and issued fresh notes to all banks in good numbers,” the central bank said.
In addition to this, the SBP BSC also established its own counters in 150 designated branches of commercial banks to provide fresh currency notes to the general public. These branches were selected from across Pakistan while ensuring maximum geographical coverage and population, it noted.
Keeping in view the higher demand for fresh bank notes before Eid, all 16 field offices of the SBP also issued new notes to the general public during the last three working days of Ramazan.
Published in The Express Tribune, August 5th, 2014.
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