Thursday, November 19, 2009
By our correspondent
KARACHI: State Bank of Pakistan Governor Syed Salim Raza has said that to reduce banking spread there is a need to find out other ways of financing, while the central bank works to provide means and relief to the income generating sectors to sustain economy.
Speaking at a meeting held on Wednesday with the members of Karachi Chamber of Commerce and Industry, he said that the bank would ensure that ample liquidity is available in the market at low interest rate for financing the export-oriented sector.
He said that since January this year the central bank has given additional concessions under its refinance scheme. “The refinance limit at Rs221 billion assigned to various banks for current 2009-10 fiscal year (FY10) is 58 per cent higher than the limit on June 30, 2008,” said he.
He pointed out that some of the significant incentives include one-year grace period on principal repayments, debt-swap for the non-textile sector, refinance for second-hand plants & machinery as well as for generators & captive power plants under Long Term Financing Facility (LTFF).
Similarly, under Export Finance Scheme (EFS) incentives and relaxations pertaining to performance-based mark-up rates, extension in repayment period under Part-I of EFS and relaxation for export over-dues were introduced.
The KCCI President Abdul Majid Haji Muhammad demanded that KCCI should be given representation in public sector institutions and regulatory bodies.
He requested the President of State Bank to give representation to KCCI in the board of directors of State Bank.
He also demanded the government to take concrete measures to bring down inflation to single digit and reduce interest rates.
In response to this demand, Raza said that the State Bank has taken various measures to effectively handle the impact of economic slowdown on financial sector such as minimum capital requirements for banks/Development Financial Institutions have been lowered, provisioning requirements have been rationalized to withstand the impact of economic recession and facilitating bank lending to businesses.
SBP Governor said that as per existing regulations a general permission has been given to authorized dealers to determine their own rates of foreign exchange, both for ready and forward transactions for the public, subject to the condition that the margin between the buying and selling rates should not exceed twenty paisa per US dollar or its equivalent in other currencies.
It is permissible for exporters/ importers to shop around for better rates. Exporters have been given three working days to retain export proceeds to shop around for better rates, he added.
Regarding SMEs Raza pointed towards SBP scheme for modernising ginning sector to improve the quality of lint cotton for better quality yarn, cloth and improving the whole product chain.
Similarly, the central bank has introduced a refinance scheme for rice husking mills, he added.
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