The Pak Banker - - FRONT PAGE -

The State Bank of Pak­istan (SBP) has in­jected Rs1.47 tril­lion into the bank­ing sys­tem to fill the widen­ing liq­uid­ity gap.

The tight liq­uid­ity sit­u­a­tion is the re­sult of ex­ces­sive in­vest­ment by the banks in the govern­ment pa­pers - Pak­istan In­vest­ment Bonds (PIBs) and trea­sury bills (T-bills) - in ev­ery auc­tion.

The govern­ment urges do­mes­tic in­vestors to play their due role in push­ing up eco­nomic growth, but it­self con­sumes most of the bank­ing liq­uid­ity to bridge the fis­cal gap.

A re­cent re­port of the SBP showed that banks' com­bined in­vest­ment in govern­ment se­cu­ri­ties rose to Rs6.039 tril­lion as of Jan 31, 2016 de­spite steep fall in the in­ter­est rates.

The govern­ment has been chas­ing the banks with the same speed to bor­row max­i­mum from the banks.

Ac­cord­ing to an­other re­port of the cen­tral bank, the govern­ment bor­rowed Rs970 bil­lion dur­ing July 1-March 4, 2015-16 pe­riod which is slightly less than Rs1.042 tril­lion it bor­rowed in the same pe­riod last year.

In 2015, banks col­lec­tively earned Rs199bn af­ter- tax profit, mostly through in­vest­ments in the govern­ment pa­pers.

Though the credit off-take by the pri­vate sec­tor in­creased by more than 100 per cent dur­ing the first eight months (July-Fe­bru­ary) of 2015-16, it was mostly for the work­ing cap­i­tal thus not help­ing the econ­omy to move for­ward.

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