Legal Role of State Bank:Pakistan

In the World every country has a main sole bank that is responsible to mange, supervise, coordinate, direction, of the subordinate’s banks that’s called central bank, or state bank. State bank of every country is the sole attorney to make the policies, rules and regulation, code of conducts of commercial banks, rules regarding financial institutions, polices about the money and monetary supply rules of foreign currency exchange, export mechanism, import mechanism, polices regarding interest rate and inflation rate, set the financing of different sector in which specially industrial and agricultural sector is mainly focused and the main responsibility is to make the monetary policies and to run the economy of country. 

State bank of Pakistan is also a sole institution of the country who managing the mechanism of all commercial bank of Pakistan. State bank of Pakistan playing an important legal role to manage the system of whole economy of Pakistan and during the last five year state bank of Pakistan is doing the tremendous efforts to make the economy stronger and developed. State bank of Pakistan have set the legal code of conducts of the banks and all bank is bound to follow the code of conducts of state bank of Pakistan to carry on their operation in Pakistan.

One of the main legal roles of state bank of Pakistan is to supervise the commercial bank either they providing services to the customer according to the set criteria of banking act or not involved in any cartel-ism  money storage, money laundering etc. If the banks found in some unethical activities or conducting misbehaviour with another banks or customer central bank can take legal action to close the operations of that particular bank.

In Pakistan state bank operation has been categorized into two ways the main head of central bank of Pakistan is in Karachi and there are sixteen offices of BSC (Banking Service Corporation) working under the state bank of Pakistan in different cities of Pakistan. BSC is the responsible to manage the legal affairs of commercial banks and settle the legal terms and condition of private banks. The main head of state bank of Pakistan who just deal in polices, practices, and regulation and another sixteen field offices of state bank of Pakistan is deal in the operational matters like in currency, deposits, exchange bonds, certificates, lucky draws, and government checks. Now we discuss in which cases State Bank of Pakistan should perform their legal role: 

•  In case of misuse of currency from the commercial banks and deals in money laundering.
•   Misbehaviour of bank staff with client central bank can take action against the commercial banks.  
• Improper services of commercial banks can also make a cause of legal action of state bank of    Pakistan.
• Irregular activities, non professionalism, violence of rules and regulation of state bank can also make a cause of legal action.

These are the main reason that makes a cause of legal action of state bank of Pakistan. But some are the areas without these areas and steps the role of state bank of Pakistan are not fulfilled and the legal role of SBP (state bank of Pakistan) is not highlights. Some highlights of state bank of Pakistan are listed below:

• .           Work with ministry of finance to deal the economy matter of the country.
• .           State bank have a legal authority to open check clearing house in all over the country and some of the financial institute like NIFT (National institute of facilitation technology) works as check clearing department with the legal permission of State bank of Pakistan.
• .           Provide the facility to transfer funds from one place to another.
• .            Publish the annual reports, statistical report, statistical analysis, on monthly, Quarterly Basis.
• .           State bank is the Responsible, to evaluate the new and old currency and make their circulation better and easy; also responsible of issuing a new currency to their chest branches and subordinate Branches.
• .           SBP deals with the foreign currency exchange and foreign certificates.
• .          Controlling of high price level and set the monetary policy according to that, channelization of interest rate in different periods of the year.
• .          Worked as a last lender of resort of all commercial banks and provide the support and the facility to carry on operation.
• .          Giving a legal support to Islamic banking to settle operation in the competition of conventional banking.
• .         Opening and closing of branches of banks, issuing of new license to the branches are the main responsibility of state bank of Pakistan.