July 20, 2006	Thursday	Jumadi-ul-Sani 23, 1427

KARACHI, July 19: The State Bank of Pakistan on Wednesday received poor response at the auction of three-, six- and 12-month treasury bills following increase in the cash reserve requirements of the banks.

The central bank received total bids of Rs15.044bn against the combined target of Rs30bn. It picked up Rs10.422bn for 12-month papers, Rs4.121bn billion for three-month and Rs211m for six months T-bills.

The SBP on Tuesday increased the cash reserve requirement (CRR) from 5pc to 7pc and statutory liquidity ratio (SLR) to 18pc from 15pc effective from July 22.

Dealers said the banks were given only four days to meet the requirement which requires depositing of Rs140bn with the SBP.

They said that only big banks were the participants of the auction and added that it would be more difficult for the SBP to offload its T-bills stocks which were rising.

They said that the SBP would face problem to raise liquidity from the banking system to channel it towards the government which used to borrow through the banking system for budgetary support.