December 04, 2007	Tuesday	Ziqa'ad 23, 1428

KARACHI, Dec 3: The State Bank has set up two separate task forces for the development of mortgage financing and to devise a mechanism for rating of SMEs.

Decision to this effect was taken in the second meeting of the Private Sector Credit Advisory Council (PSCAC) held here on Monday with SBP Governor Dr Shamshad Akhtar in the chair.

The SBP governor said that in FY07, the credit growth effectively supported the growth in real economic activity. She added that it was expected that private sector credit disbursement this year would continue to support economic growth as the central bank had continued to efficiently manage liquidity.

“The private sector credit is expected to pick up in second half of FY08 as investors have launched the pending projects and various IPP (Independent Power Producers) projects are also in pipeline involving investment of around Rs100-120 billion,” she informed the meeting.

She further said that the growth in private sector credit was broadly in line with last two years’ comparable period growth, and expanded by Rs103.1 billion in the period from July 1, 2007 to November 24, 2007.

Dr Akhtar said the disbursement of credit to the private sector had gained momentum significantly in October-November, 2007 and was likely to pick up further in the second-half of the current fiscal.

There was a general agreement that the private sector credit had been impacted, among others by (i) banks adopting cautious lending stance given the experience with loan defaults in some sectors; and (ii) mergers and acquisitions had required banks to focus on restructuring, while adjusting their portfolios and rationalising their branch network.

However, banks after their restructuring and upgradation of their credit policies and risk management systems were expected to be positioned better for credit delivery in the coming years.

During the meeting, relevant Directors of the State Bank made detailed presentations on agricultural finance, SMEs finance, consumer finance, infrastructure and housing finance, microfinance and Islamic banking finance to point out issues/constraints in the growth of credit in respective areas and initiatives taken by the State Bank to resolves these issues.

The meeting was attended, among others, by senior officials of State Bank, Presidents of selected banks, representatives of Pakistan Banks’ Association, Federation of Pakistan Chambers of Commerce and Industry and other trade bodies and government officials.