The State Bank of Pakistan further tightened the monetary policy for another six months, by raising the discount rate by 100 basis points (bps) to 13 per cent effective July 30, 2008.

The rate was last raised by 150 bps in May ’08. The decision to increase rate was taken to contain further aggregate demand pressures which are contributing to the inflationary pressures.

At the Treasury Bills auction on July 30, the SBP sold Rs39.95 billion of 3-month paper, at a cut off yield of 12.1954 per cent, having risen from 11.7825 per cent in the previous auction. The central bank did not receive any bids for the 6-month paper. The SBP rejected bids received for 12-month T-bills.

On July 31, the State Bank of Pakistan sold Rs15 billion of T-bills under 2-day repo at 10.30 per cent to mop up funds from the money market.

According to the weekly statement of position of all scheduled banks for the week ended July 19, 2008, deposits and other accounts of the scheduled banks stood at Rs3,783.937 billion, larger by Rs408.118 billion over last year’s correspond figure of

Rs3,375.819 billion. Commercial banks deposits showed an increase of Rs408.48 billion over the week to Rs3,771.712 billion, against last year’s figure of Rs3,363.232 billion. Specialised banks deposits stood at Rs12.225 billion, against last year’s corresponding figure of Rs12.587 billion, a fall of Rs0.362 billion.

Borrowings by all scheduled banks decreased when compared to last year’s corresponding figure. It stood at Rs363.284 billion over last year’s figure of Rs418.652 billion, a fall of Rs55.368 billion. This was due to a decline in the borrowings by commercial banks, which fell to Rs282.018 billion against last year’s figure of Rs337.350 billion, or by Rs55.332 billion. Borrowings by specialised banks stood at Rs81.266 billion, against last year’s figure of Rs81.302 billion.

Gross advances stood at Rs2,853.211 billion in the week under review, an increase of Rs422.278 billion over last year’s corresponding figure of Rs2,430.933 billion. Advances by commercial banks rose to Rs2,754.757 billion against last year’s figure of Rs2,335.957 billion, or by Rs418.8 billion. Advances of specialised banks stood at Rs98.454 billion, larger by Rs3.477 billion over last year’s corresponding figure of Rs94.977 billion.

Investments of all scheduled banks decreased in the week by Rs112.36 billion to Rs1,054.403 billion against last year’s corresponding figure of Rs1,166.763 billion. Commercial banks investment fell to Rs1,040.695 billion, from last year’s figure of Rs1,155.550 billion, or by Rs114.855 billion. Specialised banks investment stood at Rs13.708 billion, against last year’s corresponding figure of Rs11.213 billion, higher by Rs2.495 billion.

Cash and balances with treasury banks of all scheduled banks increased by Rs84.501 billion during the week to stand at Rs439.339 billion against last year’s corresponding figure of Rs354.838 billion. The figure for commercial banks stood at Rs436.399 billion against last year’s figure of Rs352.264 billion, a rise of Rs84.135 billion, while of specialised banks it stood at Rs2.940 billion over last year’s Rs2.574 billion.

Total assets of scheduled banks stood at Rs5,005.448 billion, larger by Rs480.283 billion, over last year’s corresponding figure of Rs4,525.165 billion. Meanwhile, commercial banks assets stood at Rs4,884.060 billion, larger by Rs474.604 billion over last year’s corresponding figure of Rs4,409.456 billion. Specialized banks assets fell to Rs121.388 billion, or by Rs5.679 billion over last year’s corresponding figure of Rs115.709 billion.