SBP chief says bank de­posits growth to be back on track soon

The Pak Banker - - FRONT PAGE - Muham­mad Yasir

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.

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