SBP chief says bank deposits growth to be back on track soon
State Bank of Pakistan (SBP) could set up banking channels with Iran within two weeks with the go-ahead signal of the Ministry of Finance, which is responsible to roll out policy with the neighboring country on the behalf of federal government.
This was stated by Ashraf Wathra while speaking to media on the occasion of Monetary Policy Statement as chairman of Independent Monetary Policy Committee constituted recently, adding the relaxation and lifting of sanctions on Iran by different developed countries have positive outcomes for regional trade including Pakistan and Iran. He said establishing network of Pakistan's banks in Iran and Iranian Banks in Pakistan will take time from one to two years but things could be done easily and smoothly without major issues accept currency.
The banking channel between Pakistan and Iran could not be run through dollar but either euro or yen, Governor said but he categorically mentioned that sanctions interpretations have not been tangible so far to take initiatives by any government in the region in near future.
Responding to question raised by Daily The Pak Banker, he said the deposits growth of the banking sector is largely in routine for high currency demand growth in local market in tandem with demand two religious festivals (Eidul Fitre and Eidul Azha) and agriculture season. However, the shrink in growth could not be ruled out by the withholding tax of 0.3 percent imposed by the government on the transaction of Rs 50,000 above by non-filers of tax returns. He showed his optimism that growth of banking deposits will be back on track in the next few months as money will again come into the banking system. Regarding stability of policy rates, he responded that maintaining status quo at 6 percent is to maintain liquidity in the banking system along with achieving targets of inflation and economic activities.
Wathra ruled out the impression that further policy cut may boost up exports of the country because exports of every country is dwindling not only in regional but in all over the world which also affect Pakistan. The rate cut will not help to boost up exports of the country while encouraging exporters due to regional and global impact, he added. The central bank already offers special discounted scheme for exporters including Export Financing Scheme, Governor added. Explaining about Monetary Policy Committee (MPC), he said the first announcement was made under independent committee which is chaired by Governor SBP along with nine members. Besides sectary of Finance, there are three senior executives of central bank, one from private sector, and three economists appointed by the government. One economic manager is yet to be appointed. This constitutions of independent committee was carried out keeping in view best international practices, he explained.
In line with the analysts' expectation, the newly formed Monetary Policy Committee of the State Bank of Pakistan (SBP) decided on Saturday to keep the benchmark interest rate unchanged for the next two months. A majority of analysts had expected the SBP would keep the rate flat at 6pc.