Sep 17 - 23, 2001
Gap in lending, deposit rates soars
The spread between the lending and deposit rates of
the banks operating in Pakistan has risen to 8.74 per cent serving as
a disincentive to the savers and adding to the financial woes of the
The latest State Bank statistics show that weighted
average lending rate of all the banks put together stood at 13.74 per
cent in fiscal 2000-01, whereas weighted average return on their
deposits was only 5 per cent. Thus the spread was 8.74 per cent up
from 8.13 per cent in fiscal 1999-00 when weighted average lending and
deposits rates stood at 14.02 and 5.89 per cent respectively.
The statistics show that weighted average lending
and deposit rates of the state-run banks stood at 13.91 per cent and
4.39 per cent in fiscal 2000-01. In other words the banks are
borrowing money from people at an average rate of 4.39 per cent to
lend it at 13.91 per cent — keeping the difference at 9.52 per cent.
This spread was much higher than 9.18 per cent as recorded in fiscal
1999-00 when their weighted average lending and deposit rates were
14.53 and 5.35 per cent respectively.
Time and again businessmen and general public voice
concern over the rise in the spread between lending and deposit rate
of the banks but to no avail. Higher spread between the two rates not
only discourages savings but also adds to the financial woes of
Senior bankers say they cannot reduce this huge
spread in the face of huge stocks of non-performing loans. Executives
of state -run banks say that a huge drag of non-performing loans makes
it difficult for them to cut markups in response to an easing off of
the monetary policy. They say if they go for lowering interest rates
in response to a 2 per cent cut in SBP discount rate in July-August,
they will also have to cut deposit rates. But that is not possible
given the fact that the banks are already paying low return on
Workers in Riyadh remit $5.58bn
Overseas workers in Saudi Arabia have transferred
SR20.95 billion ($5.58 billion), through official banking channels,
during the first seven months of the year, a Saudi Arabian Monetary
Agency (SAMA) report revealed.
This does not include transfers through illegal
means (hundi system) and the cash, which is carried by many while
travelling to their homelands. This amount, transferred through
official channels, accounts for 10 per cent of the Kingdom's total
revenue receipts and 3.5 per cent of the national GDP.
According to the available statistics, the
transfers peaked in July, coinciding with the vacations period here,
when a total of SR3.64 billion ($970 million) were transferred to
various countries. The lowest transfers during the seven months period
was recorded in April when the amount recorded was only SR2.9 billion.
NBP to launch long-term bonds
National Bank of Pakistan (NBP) is working on a
plan to launch long-term bonds to generate long-term funds for
corporate sector and mortgage business (home loans).
Talking to the reporters on Monday, NBP president
Ali Reza said the bank was going for retail banking from next year
under which new products like expanded automated transaction machines
(ATMs) network, bills payment kiosks, credit cards, auto loans, home
loans (mortgage) and fund management scheme would be initiated.
SBP pumps in Rs10.5bn
The State Bank on Thursday pumped in Rs10.5 billion
into cash-strapped inter-bank money market through a one week reverse
repo of treasury bills. The central bank purchased T-bills from the
banks at 9.45 per cent for one week at its open market operation.
Gold prices rise by Rs107
Gold prices on Wednesday swelled to all time high
to Rs6,044 per 10 grams — showing a rise of Rs107 — in just one
day as compared to Rs5,937 on Tuesday following terrorist attacks on
key installations in the United States. According to a spokesman of
Karachi Saraf and Jewellers Group (KSJG), the price of 10 tola bar
(600 grams) has shot up to Rs70,600 from Rs69,250 on Tuesday.
Shell to invest $32m in PAPCO
The shareholders of Shell Pakistan Limited (SPL) on
Monday gave a go-ahead signal to the company to invest upto $32
million in the construction of the white oil pipeline project (WOPP).
The shareholders gave their consent at an
extra-ordinary general meeting. This will give the company 26 per cent
shares in Pak Arab Pipeline Company (Pvt) Limited (PAPCO).
The total cost of the project is estimated to be
$480 million and is expected to be completed by 2002. The planned
financial structure is 75 per cent debt and 25 per cent equity, says a
ADB to provide $250m
The Asian Development Bank will spend $250 million
on Pakistani agriculture in the current financial year.
This was stated by ADB programs manager S. H.
Rehman during a meeting with Federal Minister for Food, Agriculture
and Livestock Kher Mohammad Junejo on Saturday.
ADB promises $500m loan annually
The Asian Development Bank (ADB) has provided $250
million loan for the development of Pakistan's capital markets, said
resident representative of ADB Marshuk Ali Shah on Saturday.
Speaking at a seminar on 'business opportunities'
held at the Lahore Chamber of Commerce and Industry (LCCI), he said
rationalization, transparency, equity and professionalism would be
introduced in the financial sector under the capital market
development programme loan.
Pakistan Industrial Credit and Investment
Corporation (PICIC) has financed 1,187 industrial projects by
providing Rs28 billion across the country.