The State bank was established on July 1, 1948. Since its establishment besides performing its traditional functions, it is undertaking a number of developmental and promotional functions in the best interest of the country. These functions in the past were regarded outside the purview of the central bank. The main developmental and promotional functions in brief are as under:Traditional functions: The state bank of Pakistan was originally established to perform the traditional functions of central bank of a country, monopoly of note issue, acting as a banker to the government, controller of credit, functioning lender of the last resorts.
Building up a sound banking system: For rapid economic development of a country the building up a sound financial system is necessary. The State Bank of Pakistan immediately after its establishment in 1948 took up this task. The start was made with establishment of national bank of Pakistan. Since then the total number of domestic scheduled banks has increased to eight thousand. These banks are playing a prominent role in the mobilization of savings in rural and urban areas of the country.
Credit targets: The State Bank of Pakistan gives targets to commercial banks for providing loans in the field of agriculture, industry, housing every year. The prescribing of credit targets for these priority sectors has greatly helped in raising productions.
State bank can play a very important role in the economic development of Pakistan because it is responsible for conducting monetary policy in Pakistan. Monetary policy controls money supply and also determines price level. This inflation control can impact employment in Pakistan and hence it impacts the economic growth in the country. Economic development of Pakistan is also possible because state bank also maintains the stability of the national currency and improves trade balance by impacting positively on exports.
Central bank is like the life blood of any nation
Comparison of role state bank of pakistan