May 31, 2008	Saturday	Jamadi-ul-Awwal 25, 1429

KARACHI, May 30: The Governor, State Bank of Pakistan, Dr Shamshad Akhtar has said the central bank in consultation with the government will look into the demands of the industry for exempting essential industrial raw materials from mandatory 35 per cent cash margin requirement on opening letters of credit (LCs) to facilitate the industry.

She made these remarks while talking to a delegation of Federation of Pakistan Chambers of Commerce and Industry (FPCCI), which called on her at central bank’s headquarters here on Friday, says a SBP press release.

Representatives of the FPCCI apprised the SBP governor of the problems being faced by the industry after the introduction of cash margin requirements, saying that the industry is facing the problem of shortage of working capital.

Dr Akhtar assured the delegation that the central bank will look into the matter and asked the FPCCI to submit a list of raw materials for consideration of the State Bank and the government.

“We are working diligently for the betterment of the economy and the industry. We have always accommodated the industry and will do so in future as well,” she remarked.

During the meeting, the SBP governor explained in detail about the rationale behind taking recent interim monetary policy measures and said the 150 basis points increase in the discount rate has been necessitated by the persistent and excessive government borrowing from the SBP to meet the financing requirement of the budget deficit.

Stock of government borrowing from SBP is more than double of last year’s level and in order to offload this huge debt to the scheduled banks, this rate hike will act as a critical measure to induce the scheduled banks to participate actively in Treasury bill auctions, she said.

FPCCI President Tanvir Ahmed Sheikh said that they now have better understanding about State Bank’s actions and assured that the industry will fully cooperate with the central bank.—APP