September 26, 2002	Thursday	Rajab 18, 1423

KARACHI, Sept 25: The inter-bank market on Wednesday borrowed Rs4.5 billion overnight funds from the State Bank through discounting of approved securities to meet their daily liquidity requirements.

On Tuesday also the market had discounted by Rs6.4 billion.

Senior bankers close to the State Bank said that the combined discounting of Rs10.9 billion in two days showed that earlier show of high liquidity by the banks during the auction of the T-bills was exaggerated.

Of late banks have become used to submitting unrealistically high bids for T-bills without having enough liquidity available with them. This forces the SBP to mop up more than targetted liquidity from the market to keep the T-bills yield from falling to undesirable levels.

Naturally the banks then find themselves short of liquidity and have to resort to heavy discounting. Bankers said overnight call rates remained almost pegged to 8.90 per cent on Wednesday after Rs4.5 billion discounting. The SBP discount rate is 9 per cent — last changed in mid February this year.