ISLAMABAD, Aug 12: The State Bank has allowed commercial banks to make financing available for purchase of consumer durables.

This was announced by State Bank Governor Dr. Ishrat Hussain at a joint news conference with Commerce Minister Abdul Razak Dawood here on Monday.

Dr. Ishrat said these restrictions were imposed on commercial banks in 1985-86, and had been lifted with immediate effect. He said the State Bank had injected sufficient liquidity in the banks but added that they must come forward and participate in consumer financing for the benefit of the lower and middle classes.

“This will increase profitability of the banks.” He, however, refused to give the interest rate to be charged by the banks, but said it would be market based.

Giving an example, he said before the introduction of car financing scheme, the total sale in the country was 32,000 cars annually, which had now gone up to 42,000 cars per year.

In reply to a question, Dr. Ishrat said there would be no minimum or maximum limits for such loans. To yet another question, he said the country’s foreign exchange reserves had crossed $7 billion mark.

The commerce minister said through consumer financing by the banks, people would be able to purchase locally assembled or manufactured items like TV sets, air-conditioners, refrigerators, washing machines and motorcycles.

He said the government wanted more and more people to benefit from this scheme. It will also help increase industrial production and create more job opportunities. He pointed out that increased production of these items will lead to lower the cost of production.