State Bank of Pakistan (SBP) Act, 1956

This 1956 Act establishes and governs the State Bank of Pakistan (SBP), the country's central bank. Section 3 sets it up as a body corporate to take over currency management from the Reserve Bank of India and carry on central banking. Section 4, as amended, fixes an authorized capital of five hundred billion rupees divided into five billion shares of one hundred rupees each, increasable by Board resolution with government approval. Sections 4B and 4C, added by later amendment, spell out SBP's objectives -- centred on domestic price stability -- and its functions.

Governance sits with a Board of Directors (Section 9), whose powers are set out in Section 9A. Section 9C specifically prohibits the Government from borrowing directly from the Bank. Sections 9D and 9E establish a Monetary Policy Committee and set out its powers and functions. The Governor and Deputy Governors are covered in Section 10, with disqualification rules in Section 13, terms of office in Section 14, and a specific process for dismissal in Section 15.

Chapter IV covers SBP's business and functions: Section 17 lists the business it may transact, Section 17G names it as lender of last resort, and Section 17H gives it regulatory powers. Section 20 lists business SBP may not transact. Sections 24-29 cover its sole right to issue bank notes, what counts as legal tender, the Issue Department, note denominations, and rules for lost, stolen, mutilated, or imperfect notes. Section 35 creates offences and penalties for unauthorized issue of notes or bills, and Sections 36-37 cover minimum reserve requirements and the list of scheduled banks.

Chapter V covers general matters: external audit (Section 43), oversight by the Auditor General of Pakistan (Section 44), and an audit committee (Section 45). Section 46 makes the Bank and its officers public officers, Section 46B addresses SBP's functional and institutional autonomy, and Section 53 requires officers and staff to maintain secrecy. Sections 48-49 exempt SBP from stamp duty and taxes. Section 54A states the Act overrides other laws. Section 55 repeals the earlier State Bank of Pakistan Ordinance, 1955.

The extract shows this Act has been substantially reshaped by the State Bank of Pakistan (Amendment) Act, 2022, which added the price-stability objective, the Monetary Policy Committee, the prohibition on government borrowing, and related autonomy provisions -- so readers should treat the Act as recently and significantly amended and check current text on points of detail.