Banks seek discounting from SBP to meet liquidity needs
ON October 7, the banks’ went for heavy discounting from the State Bank of Pakistan to meet their liquidity requirements on the last day of cash reserve settlement with the central bank, as they were facing severe liquidity crunch on account of heavy withdrawals just before Ramazan.
The banks raised Rs35.5 billion through discount window to settle their cash reserves requirement with the State Bank. They raised Rs13.5 billion on October 5, through discount window.
The shortage of liquidity pushed the overnight rate to the highest level of 8.9 per cent, just below the discount rate of 9 per cent. The bankers said that there was a dearth of liquidity in the banking system which forced the banks to go for State Bank’s help.
According to the Statement of Affairs of the State Bank of Pakistan, for the week ended July 2September 24, 2005, both notes in circulation and those issued decreased in the week. Notes in circulation stood at Rs708,623.012 million against earlier week’s figure of Rs712,323.612 million, a fall of Rs3,700.6 million. When compared to the corresponding week a year ago when it was Rs617,931.129 million, the current week’s figure is higher by Rs90,691.883 million.
Total notes issued also fell in the current week over preceding week’s level. At Rs708,781.734 million it was lower by Rs3,739.649 million over the figure of Rs712,521.383 million recorded a week earlier. In the corresponding week last year it amounted to Rs618,077.920 million, which shows current week’s figure to be higher by Rs90,703.814 million over last year’s corresponding figure.
Approved foreign exchange rose in the week to Rs450,250.687 million or by Rs1,430.472 million over preceding week’s figure of Rs448,820.215 million. When compared to the corresponding week a year ago, when the figure was Rs428,628.537 million, the current week’s figure is higher by Rs21,622.15 million.
Balances held outside Pakistan in approved foreign exchange increased in the week under review. It stood at Rs141,300.286 million over preceding week’s figure of Rs138,772.118 million, a rise of Rs2,528.168 million. Compared to last year’s corresponding figure of Rs191,781.544 million, the current week’s figure is smaller by Rs50,481.258 million.
Loans and advances of scheduled banks to the three sectors – agricultural, industrial and export showed a mixed trend in the week under review. The agricultural sector received Rs60,224.062 million, against preceding week’s figure of Rs59,565.262 million, showing an increase of Rs658.8 million. The current week’s figure is larger by Rs1,818.781 million over last year’s corresponding figure of Rs58,405.281 million.
There was an inflow of Rs1,659.622 million to the industrial sector during the week under review, a rise of Rs12.07 million against preceding week’s figure of Rs1,647.552 million. When compared to last year’s corresponding figure of Rs2,190.840 million, the current week’s figure is lower by Rs531.218 million.
The export sector received Rs98,992.774 million against previous week’s figure of Rs96,914.661 million, an increase of Rs2,078.113 million. Current week’s figure was larger by Rs9,246.752 million over last year’s corresponding figure of Rs89,746.022 million.
According to the weekly statement of position of all scheduled banks for the week ended September 24, 2005, deposits and other accounts of the scheduled banks stood at Rs2,408.42 billion, declining by Rs1.78 billion over preceding week’s figure of Rs2,410.20 billon. Commercial banks deposits showed a fall of Rs1.59 billion over the week to Rs2,395.44 billion against preceding week’s Rs2,397.03 billion, while of specialized banks it fell by Rs0.19 billion to Rs12.98 billion, over previous week’s Rs13.17 billion.
Borrowings by all scheduled banks increased during the week. It rose to Rs303.04 billion over preceding week’s figure of Rs298.71 billion, a rise of Rs4.33 billion. This was primarily due to substantial increase in the borrowings by commercial banks, which rose to Rs223.30 billion against previous week’s Rs219.63 billion, a rise of Rs3.67 billion, while borrowings by specialised banks rose by Rs0.67 billion to Rs79.75 billion against Rs79.08 billion a week earlier.
Gross advances stood at Rs1,803.29 billion in the week under review, a rise of Rs2.16 billion over preceding week’s figure of Rs1,801.13 billion. Advances by commercial banks rose to Rs1,693.23 billion against earlier week’s figure of Rs1,691.82 billion or by Rs1.41 billion.
Investments of all scheduled banks declined in the week by Rs4.55 billion to Rs766.55 billion against preceding week’s figure of Rs771.10 billion. Commercial banks investment level fell to Rs756.18 billion, from earlier week’s Rs758.91 billion or by Rs2.73 billion, while of specialized banks it stood at Rs10.37 billion against previous week’s Rs12.19 billion, a rise of Rs1.82 billion.
Cash and balances with treasury banks of all scheduled banks recorded a decline of Rs4.14 billion during the week to stand at Rs218.19 billion against earlier week’s Rs222.33 billion. The figure for commercial banks declined to Rs216.57 billion against preceding week’s figure of Rs220.65 billion, a fall of Rs4.08 billion. For specialized banks the drop was to the tune of Rs0.05 billion to Rs1.63 billion, against earlier week’s figure of Rs1.68 billion.
Total assets of scheduled banks stood at Rs3,165.11 billion, a decrease of Rs39.15 billion, over preceding week’s figure of Rs3,204.26 billion.
ON October 7, the banks’ went for heavy discounting from the State Bank of Pakistan to meet their liquidity requirements on the last day of cash reserve settlement with the central bank, as they were facing severe liquidity crunch on account of heavy withdrawals just before Ramazan.
