Role of State Bank of Pakistan

But the above mentioned are not the only sources of corruption. There are many others such as financial institutions and the banking system etc. This brings us to the lethargy and unconcern of the State Bank of Pakistan as the fourth pillar of good governance. The central bank is the custodian, the monitor, the watchdog of the economy of a country. With all the fiscal monetary policies, powers and instruments in hand how could the country’s financial health deteriorate all of a sudden? The tornado of inflation was building up under its nose. The value of the Rupee was dipping in its full view. The quick depletion of the foreign exchange reserves was within its knowledge. The balance of payments was becoming unfavorable very well known to all concerned. The Bank was required to take tough, unrelenting, unsparing timely actions even to the displeasure of the people in power. It did nothing of the sort. It kept on hibernating in a fit of  fast slumber and woke up only when the state of the economy had gone completely out of hands. As banker’s bank, of late, it announced certain tight monetary policy measures which instead of improving the situation are said to have worsened it further. It let lose the banking sector to expand credit relentlessly. The banks made windfall profits which they should have shared with the depositors. Most of them neither looked after the welfare of their employees nor invested in productive projects. Their unproductive channels became the lease financing of cars major parts of which were imported involving expenditure of foreign exchange. The negligent State Bank is the principal agent for bringing about economic crisis in Pakistan.