KARACHI, July 11: Banks had to make an overnight borrowing of Rs31.5 billion from the State Bank on Thursday to make up for the shortfall in the liquidity level.

Bankers said the liquidity level declined after the State Bank siphoned off Rs66 billion from the system through auction of treasury bills held on Wednesday.

“Many a bank resorted to heavy discounting and call rate got closer to the discount rate after Rs66 billion went out of the system,” said a senior foreign banker.

He said overnight call rate shot up to 8.95 per cent against the discount rate of 9 per cent adding that one week funds also changed hands at a rate slightly higher than the discount rate.

“This is something unusual and it shows that some banks were keen on borrowing money from the market rather than through the discount window.”

Bankers close to SBP said the list of the banks that resorted to heavy discounting included a large privatized bank. They said huge discounting by a number of banks proved that a big chunk of the Rs70 billion bids generated by Wednesday auction of T-bills was speculative.