Dec 11 -
SBP injects Rs10.3bn
Money market remains tight as monetary targets tagged
with the $596 million IMF loan make it difficult for the State Bank to
ease off an ongoing liquidity crunch. But if the SBP is able to get some
leeway from the IMF for which efforts are under way then it may contain
the liquidity crisis to some extent.
The SBP injected Rs 10.30 billion in the inter-bank
market on Thursday but the injection had a little impact on the short
term lending rates.
Bankers said banks were so much short of liquidity
that SBP received no bids for outright or repo sale of treasury bills at
its open market operation. But it attracted Rs 15.67 billion worth of
offers for purchase of treasury bills of two weeks to maturity: SBP
accepted offers worth Rs 10.3 billion at 11 per cent and rejected the
Bankers said the modest injection helped banks to
square their daily positions and no major discounting from SBP was
"But it had a little impact on lending rates
structure," said head of a foreign bank's treasury. He said
overnight repo rates opened at 12.95 per cent and fell to 11.0-11.5 per
cent on news of the OMO. "But the rate shot up again to 12.50 per
cent towards the end of the day."
The inter-bank money market has been short of
liquidity for a couple of months as an expansionary monetary policy was
replaced by a tight policy in late September.
For the past few weeks banks have been discounting Rs
7-10 billion daily to square their books. On October 4, the SBP had also
raised the cash reserves requirement for the banks from five to seven
per cent thereby sucking in about Rs 24 billion from the market. The
move came as part of an overall tight monetary policy put in place to
stabilize the rupee that shed more than 11 per cent of its value between
July and October.
Corporate profits, dividends improve
A total of 185 companies, which measured to nearly 90
per cent of the 206 listed companies that had unveiled results until
end-October, posted profit for the financial year 2000.
In contrast, 425 companies or 63 per cent of the 670
listed companies had reported profit last year, the Karachi Stock
Exchange Annual Report released on Monday, showed. The report indicated
that the figures for 1999 had been updated upto the previous month.
Against 248 companies who had made losses last year
and 325 companies the year before, the number of loss making companies
diminished to only 21 during the year 2000.
While the corporate profitability is seen to have
visibly improved during the latest year, the more delightful aspect is
the huge increase in the number of companies that declared dividends for
All except 18 (9 per cent) of the profitable 185
companies announced dividends this year; last year 95 companies and 113
companies in 1998 though profitable, had opted to skip dividends.
Paid-up capital for banks raised
The State Bank (SBP) has raised the required minimum
paid-up capital of banks from Rs500 million to Rs1 billion and has asked
them to raise their paid-up capital to the required level by January 1,
An SBP circular (BSD 31) issued to all banks on
Wednesday said banks are required to enhance their paid-up capital —
net of losses — to Rs750 million on January 1, 2002 and to Rs1 billion
on January 1, 2003.
The circular says the minimum paid-up capital has
been raised to facilitate the banks and financial institutions to
strengthen their competitive ability, both domestically and
NBP to improve its retail banking
National Bank of Pakistan (NBP) has decided to
improve and restructure its retail banking in order to provide better
services to its five million customers.
This was stated by the President NBP, Syed Ali Raza
in a meeting with members of the Federation of Pakistan Chambers of
Commerce and Industry (FPCCI) at an Iftar party on Thursday.
"It is a criminal injustice that we do not have
any authentic retail banking," he said attributing this to
non-availability of technology.
SBP to liberalize forex regime
The State Bank will begin to liberalize the foreign
exchange regime in second half of current fiscal, that may bring some
volatility in the exchange rate and may lead to countervailing measures,
a tight monetary policy despite a weak economic growth, to stabilize the
As it is, the government has lowered its target of
economic growth for this fiscal to 4.5 per cent from 4.8 per cent last
year with simultaneous estimated rise in inflation rate from 3.6 per
cent to six per cent. The strategy for economic growth would take a back
seat in the face of IMF-induced pursuit of illusive fiscal and exchange
The government will offer floating returns on new
defence saving certificates (DSCs) from next month and on all other
instruments of national saving schemes from July 1, 2001. It will also
withdraw the tax exemption from all instruments of NSS from next fiscal
The decision is part of the financial sector reforms
that the government is supposed to follow under the agreement signed
with the IMF for securing a $596 million standby loan.
SHYDO to be privatized
The provincial public sector Sarhad Hydel Development
Organization (SHYDO) would privatize its all small hydel power stations
due to incurring losses, official sources told on Monday.
There are over 10 small hydel power stations in
Malakand and Hazara divisions, which the SHYDO would offer to the
These small power generation stations, with necessary
distribution system, were incurring huge financial losses forcing the
SHYDO to dispose them of, said the sources.