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              The state bank of Pakistan work constitutional act 1956.whichallows the bank to work as central bank of country. The state of Pakistancontrol the financial activities and institution of Pakistan. And also help toutilized the resources of Pakistan.State Bankof Pakistan – Bank Services corporation  was establish under ordinance 2001.Throughthis SBP can mange currency and credit management .SBP work as  clearing house.

SBP work as agent of Pakistangovernment. History WhenPakistan came to an existence country. A country without the central bank orbanking system was are almost non-existance. Out of 3496 branches of scheduledbank 631 in Pakistan. Hindus withdraw all the money withdraw form which interroty Pakistan and the result many bank are bankrupt.

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Before 30 September1948 the monetary policy controlled by reserve bank of india. After 30september SBP realized that the country interest wloud be hurt. And thendecided SBP take our the control the all financial activities.Functions and objective of state bank of Pakistan solve rightof note issue: In Pakistan country, SBP has sole right or monopoly of note  issue ,this authority has been given tocentral bank for:·        Uniformityin the note ·        Tocheck undue expansion of notes·        Tomake surethat notes issued are the liability of the bank and get full supportof state.Thereare fallowing three main method of notes. ·       Fixedfiduciary system ·       Proportionalreserve system·       Minimumreserve system       Bankto the government:·        SBPKeeping the deposite of the central  andprovincial government .

it make the payment on the behalf of govt.it does notpay  interest on the govt deposite·        Advanceloan as fical agent ,SBP provide loan to govt and make investment inT.Bill  long-term govt security ·        SBPTransfer the capital  of central andprovincial govt from one place to another·        SBPalso advises the govt on economic matter such as controlling inflation  or deflation devalution and revaluetion  of the currency and balance of payment etc.·        SBPkeep the account of govt of different department.it does not charge anycommission.·        SBPis not only the custodian of govt security,but also work fort their sale andpurchaseBanker’s to bank·        SBPact as Clearing house for settlement of mutual claim of commerecial  banks ·        SBPact as lender of last resort for the commercial banks.

The SBP lend the moneyto scheduled bank .save the bank stress financial structure.·        Anew bank or a branch of an existing bank cannot be established without theprior permission of state bank of bank of Pakistan·        SBPregulate the policies of Advancing loans for commerecial banks fixed  the rate of interest to be charged.·        Theduty of SBP to promote thr growth of the banking system on sound footing.

Leader of the capital market·        SBPbank as considered as leader or guardian of capital market because it worksits  establishment, make policy and takediscussion to avoid undue expansion of contraction of credit and to stable thecredit or money system.·        SBPis responsible for the management of foreign exchange and maintenance or theexternal value of home currency more over foreign exchange reserves  also kept with the state bank ofPakistan  its prepare  balance the payments accounts of country  to keep the balance farovable ·        SBPIS the supervisor or custodian of the metallic reserve.it keeps them eith greatcare and safety metallic reserve of commerecial bank .·        SBPis fixed exchange of domestic currency in tream of foreign currencies .

its holdthese rates within narrow limit in keeping with obligation member ofinternational monetary funds and tries to bring stability in foreign exchangerates .·        SBPact as the respresentative of govt in international trade beside makinginvestment international market ,its also provide foreign exchange toimporterand exporter in pakistan   MONETARY POLICY   IF themonetary system of the country is unorganized then the balance of demand anssupply  of credit disturbs. Due to whichthe economic system of the country face many difficulties .if the amount ofcredit increases in any country the country become inflation stricken, whichleads to the problem of dearness .On the other hand ,if the amount ofcredit  decreases  then thecountry become deflation strickenwhich leads to the lower investment.·        Themain objective of monetary policy is not only to maintain the condition ofemployment in the country but also to creat mre opportunities of employment inless developed country ·        Mantainanceof price stability does not mean to keep the prices fixed but to avoid the inflationand deflation monetary policy is direct to words controlling inflation by decreasingthe total amount of credit controlling expansion with designed limit and curingdeflation by increasing it.·        Tomaintaining relative stability in the exchange rate is known as exchange stabilityfor exampel external value of the country `s currency .its also mantainance  of balance of payment in equilibriam or atleast improve  its positon  ·        Theforeign value of currency is monetary policy help in consolidating the, externalvalue of local currency let to growth in trade.

 ·        Increasingin investment with the help of monetary policy state bank of vital role in theenhancement of investment, which result economic stability. ·        Economyof the country come into because of decreases in the deposit of gold these effectcan be remove with the help of monetary policy. ·        Thedevelopment of any country depends upon stable capital market. the state bankof Pakistan take help of monetary policy in order to create stability incapital market. ·        Monetarypolicy also play also important of wealth, which help to achieve full employment.

 ·        Statebank of Pakistan generate economic stability by controlling inflation anddeflation  ·        Statebank of Pakistan steady growth in the national product and per capital income.it requires best utilization of productive resources. Thus with theseobjective the credit control policy and aims at mobilization of monetaryresources and insuring their fuller an productive  us. ·         The monetary policy various productive sectorare encouraged to get loan due to which comprehensive increases in productioncan be expected.ClearinghouseClearinghouse is a place at state of Pakistan  orany other lending bank of the located where the representatives of the memberbanks come at the fixed time and exchange cheques or draft drawn on each other an still the resulting balance toentries in the books of bank acting as clearing houses.FOR EXAMPEL:Suppose there are to bank in the city (bank A and bank B) andthe following payment.

Bank A payable to bank B= RS80000Bank B PAYABLE TO BANKA=RS70000The mutual obligations of each backs as under. In the aboveexample RS10000 is the balance because the receivable amount of bank B isRS80000 and the receivable amount of bank A RS70000 will be cancel and surplusis 10000 debit a bank B in its books credit by bank A in it books . as result,this operation will be accomplished in less time period with the help ofclearing houses of  state bank ofPakistan .·        Inthe presence of clearing houses banks of Pakistan have no need to keep largesum of money in hand so they become able to give greater amount of credit.

·        Thetransfer of cash from one place to another place without its physicalinvolvement.it prevent the danger of the loss of cash in transit.·        Inthe presence of clearing houses do not kept large reserve this in able that toprovide   financing for trade, industrial andagricultural large.

·        Theclearing houses can be provide an effective device for preventing destructiveand undesirable competition among member banks·        Thestate bank of Pakistan keeps a strict check on the activities of the memberbanks. It keeps the cash reserve of the banks and can carry out the monetarypolicy in the best interest of the nation·        Atclearing house, the number and amount of cheques reflect the efficiency ofbanks which shows the pace of economic development of country.·        Atthe clearing house, banking experts get opportunity to discuss the flaws ofbanking section which lead to effect banking system ·          In the presence of clearing house, banks keepless cash which puts them in a better position t give loan.  as a result, the trading sector growsrapidly.

·         The member banks can arrange a uniform policyfor issuing L.c., bank drafts or foreign and for other services.·        Banksprovide better services to their consumer connection with the collection ofcheques.

Businessmen and other people are able to receive the payment to theircheques very quickly.MISSION OFSTATE OF PAKISTAN    TO provide better banking and financial system stakeholde beside insuringimplementation of state bank of Pakistan in order to commend their trust andrespect.VISSION OFSTATE BANK OF PAKISTAN     TO STATE BANK O F PAKISTAN – BANK SERVICESCORPORATION in to dynamic and in efficient organization equipped with requisitetechnology and human resource capable of standing suitable support to the statebank of Pakistan in achieving its objective