January 19, 2007	Friday	Zilhaj 28, 1427

KARACHI, Jan 18: The State Bank has increased the daily minimum Cash Reserves Requirement (CRR) for banks, which would further tighten the monetary policy announced on Thursday.

“It has been decided to revise the daily minimum requirements for cash reserves to 6 per cent and 2 per cent of demand and time liabilities, respectively, with effect from January 19, 2007 for all banks and DFIs including Islamic banks,” said a SBP circular.

The weekly average Cash Reserves Requirement will remain the same, it added.

The SBP elaborated that the weekly average will be 7 per cent (subject to daily minimum of 6 per cent) of total demand liabilities (including Time deposits with tenor of less than 6 months).

And the weekly average will be 3 per cent (subject to daily minimum of 2 per cent) of total time liabilities (including Time deposits with tenor of 6 months and above).

Experts said that the increase of CRR would impact upon the availability of liquidity, which could push the interest rate high.

“This is a part of further tightening of monetary policy as the SBP did before by increasing the CRR and SLR (Statutory Liquidity Requirement),” said an expert.