The State Bank of Pakistan (SBP) has injected a record Rs14.3 trillion into commercial and Islamic banks for seven days. This move comes after a major cash withdrawal during Eid-ul-Adha and delays in expected foreign inflows. The central bank conducted the injection through its regular open market operation (OMO). The amount equals almost 44% of total bank deposits, which stood at Rs32.7 trillion in May 2025.
According to SBP Governor Jameel Ahmad, two reasons caused the liquidity crunch. First, a temporary spike in currency withdrawal by people during Eid reduced deposits. Second, the delay in external financial help from lenders like the IMF and World Bank increased reliance on local debt. As a result, the government turned to banks to fill the funding gap. Experts from Arif Habib Limited and Topline Research confirmed the OMO level is the highest ever recorded.
In response, the SBP accepted all 34 bids from conventional banks and 3 bids from Islamic banks. It provided Rs13.9 trillion to regular banks at a 7-day return of 11.03%. Additionally, it offered Rs375 billion to Shariah-compliant banks at 11.11% for the same period. These emergency funds are expected to ease short-term liquidity problems. However, analysts believe the injection level may drop as foreign inflows arrive in the coming weeks.
Meanwhile, Pakistan’s fiscal deficit continues to rise. Tax revenue remains low, while government spending keeps increasing. Due to this imbalance, the government is borrowing heavily from commercial banks. Out of Rs31.8 trillion in total domestic debt, Rs28.1 trillion comes from bank loans. This trend shows increasing pressure on the banking sector to fund the gap created by weak revenue and delayed aid.
SBP’s move helped stabilise the banking system temporarily. Yet, experts say long-term recovery depends on improving tax collection and securing foreign aid. For now, the record liquidity injection has provided some breathing space to banks. But unless broader reforms happen, the need for more emergency support could return soon.