AVN 64.79 Increased By ▲ 0.62 (0.97%)
BAFL 30.49 Increased By ▲ 0.59 (1.97%)
BOP 4.72 Increased By ▲ 0.09 (1.94%)
CNERGY 3.88 Decreased By ▼ -0.01 (-0.26%)
DFML 13.58 Increased By ▲ 0.23 (1.72%)
DGKC 41.35 Increased By ▲ 0.50 (1.22%)
EPCL 47.00 No Change ▼ 0.00 (0%)
FCCL 11.20 Increased By ▲ 0.20 (1.82%)
FFL 5.11 Increased By ▲ 0.03 (0.59%)
FLYNG 5.80 Increased By ▲ 0.03 (0.52%)
GGL 10.00 Increased By ▲ 0.25 (2.56%)
HUBC 63.80 Increased By ▲ 1.85 (2.99%)
HUMNL 5.71 Increased By ▲ 0.06 (1.06%)
KAPCO 27.78 Increased By ▲ 0.20 (0.73%)
KEL 2.14 Decreased By ▼ -0.01 (-0.47%)
LOTCHEM 24.48 Increased By ▲ 0.18 (0.74%)
MLCF 21.20 Increased By ▲ 0.48 (2.32%)
NETSOL 85.00 Increased By ▲ 1.90 (2.29%)
OGDC 87.65 Increased By ▲ 1.60 (1.86%)
PAEL 11.07 Increased By ▲ 0.27 (2.5%)
PIBTL 4.18 Increased By ▲ 0.04 (0.97%)
PPL 77.30 Increased By ▲ 1.11 (1.46%)
PRL 13.69 Increased By ▲ 0.03 (0.22%)
SILK 0.89 No Change ▼ 0.00 (0%)
SNGP 41.40 Increased By ▲ 0.65 (1.6%)
TELE 5.93 Increased By ▲ 0.05 (0.85%)
TPLP 15.89 Increased By ▲ 0.24 (1.53%)
TRG 112.81 Increased By ▲ 2.71 (2.46%)
UNITY 14.06 Increased By ▲ 0.31 (2.25%)
WTL 1.14 Decreased By ▼ -0.01 (-0.87%)
BR100 4,035 Increased By 68.4 (1.72%)
BR30 14,456 Increased By 271.1 (1.91%)
KSE100 40,545 Increased By 674.1 (1.69%)
KSE30 15,149 Increased By 251.6 (1.69%)
Follow us

KARACHI: The State Bank of Pakistan (SBP) has allowed the Development Finance Institutions (DFIs) to participate in the Open Market Operations (OMOs) to manage their liquidity.

With this measure, DFIs can invest excess liquidity and borrow the amount from the State Bank of Pakistan.

OMOs - a monetary policy tool used by the SBP to inject or mop up funds based on the liquidity requirements, from the banking system via the purchase or sale of eligible securities.

In case of OMO injections, the SBP lends funds to banks or primary dealers against eligible collateral to address liquidity shortage in the system. In OMO mop up, the SBP sells MTBs to banks against funds to remove surplus liquidity from the system.

Previously, only banks and primary dealers were allowed to participate in OMOs and DFI were not eligible for OMOs.

On Tuesday, the State Bank amended its previous instructions, in terms of which all scheduled banks and primary dealers are allowed to participate in OMOs besides allowing DFIs to participate in OMOs.

“Now, the SBP has decided to allow Development Finance Institutions to participate in OMOs with a view to facilitating them in their liquidity management,” said a circular issued on Tuesday.

Accordingly, DFIs would also be eligible to participate in OMOs as per instructions and procedure for OMOs as per term and conditions of SBP announced in the master circular of OMOs issued in July 2017.

With fresh directives banks, PDs and DFIs are eligible counterparties to OMO transactions. For Bai Muajjal transactions, Islamic banks and specialized Islamic windows of conventional banks are eligible counterparties.

Industry sources said that this move will help the DFIs to borrow from the SBP to meet their financing requirement or park their excess liquidity for a short term period.

As per the SBP directives, Government of Pakistan Market Treasury Bills, Pakistan Investment Bonds and any other security notified by SBP are the eligible securities for OMOs. The SBP announces OMOs as and when required by the market conditions.

An eligible participant can submit up to three bids in a single OMO tenor. The minimum bid amount will be Rs100 million and multiples of Rs50 million thereof. There is no restriction on the SBP in terms of tenor of conventional OMOs. However, usually the SBP conducts OMOs of shorter tenors (eg, 7 to 14 days).

Copyright Business Recorder, 2022


Comments are closed.

Liquidity management: DFIs can participate in OMOs: SBP

Death toll in Peshawar mosque suicide blast passes 90

Dar meets IMF review mission, apprises it of planned power sector reforms

Intra-day update: rupee sees some improvement against US dollar

Intra-day update: Bull run at PSX, KSE-100 up over 750 points

Pakistan's performance worsens in corruption perception index

Toshakhana case: Islamabad court decides to indict Imran Khan on February 7

Bangladesh secures $4.7bn from IMF as other South Asian countries see delays

Central banks bought the most gold since 1967 last year, WGC says

Talks with IMF team: Doubts exist about Dar-led team’s capability

Crucial IMF talks begin today