What Is The Back Ground Of State Bank Of Pakistan?

Immediately after independence, there was no central bank in our country.  It was very difficult for Pakistan to run its own banking system immediately.  Therefore, in accordance with the provision of independence act, 1947, Reserve Bank of India should continue function in Pakistan until September, 1948 to settle the problems of time and demand liability, coinage, currencies, exchange etc.  Indian note would continue to be legal tender in Pakistan till 30th September, 1948 and Pakistan would take over the management of public debts and exchange control from Reserve Bank of India on 1st April, 1948.

The Reserve Bank of India was not much willing to help the infant country.  The imperial Bank of India which has been acting as the Agent of Reserve Bank of India also started closing down its branches in Pakistan and was not willing to purchase the Government of Pakistan securities.  The Reserve bank withheld the Pakistanis share of Rs. 75 crores in cash balance.  In view of these unfavourable situations it was decided and agreed between India and Pakistan that Reserve Bank of India will serve as monetary authority in Pakistan unto 30th June, 1948.  

For regulating the monetary and banking system in the country, it was urgently felt the necessity of establishing a central bank.  As a result; an experts committee was appointed to recommend necessary steps, including required legislation to establish a central bank for Pakistan.