LAHORE – The government departments in Punjab are now authorized to place public funds in financial institutions, including public banks, private commercial banks, Islamic banks, and microfinance banks, broadening investment landscape.
Authorities set strict eligibility criteria for commercial banks, making a minimum long-term credit rating of “AA” mandatory for participation. Only financially strong and highly rated institutions will qualify to handle government deposits.
The government funds will be directed toward banks offering higher profit returns than the Bank of Punjab, effectively triggering a profit-based competition among financial institutions seeking access to public deposits.
The policy further introduces structured safeguard mechanism, if any competing bank offers a higher return, Bank of Punjab will be granted a 14-day window to revise and match its offer, ensuring competitive balance and protecting existing financial arrangements.
Officials said the core objective of this bold reform is to enhance the efficiency of public fund management, maximize financial returns for the government, and ensure better utilization and growth of state resources through market-driven mechanisms.
This decision is expected to intensify competition among banks and significantly reshape how government liquidity is managed across Punjab’s financial ecosystem.
SBP increases interest rate by 100 basis points to 11.5%
