KARACHI, Nov 13: Both the State Bank and commercial banks have assured smooth flow of credit to meet the demand of trade and industry as the liquidity shortage is still a major problem that hurts the business community.

The assurance was given to traders and industrialists, who participated in the meeting at the SBP on Thursday. Chief executives of banks were also present on the occasion.

SBP Governor Dr Shamshad Akhtar assured the participants that every effort would be made to meet the credit needs of the productive sectors for growth of the economy.

“The central bank will further strengthen its mechanism for monitoring liquidity requirements and will take appropriate actions to meet multiple demands of financing,” she said.

The representatives of the banking industry endorsed the view of the governor by saying that there are demands of credit from all sectors and they would support the industry in its revival and meet their credit needs, particularly of the productive sectors ‘within manageable risks’.

The representatives of the trade bodies wanted the SBP to remove bottlenecks in the flow of credit to various sectors of the economy.

They said that the SBP had been taking steps to provide liquidity to the banking system but the remedy did not work enough to meet the demand of the trade and industry. At the same time, the State Bank wants to cut the demand by increasing the discount rate from 13 to 15 per cent.

Regarding procedural issues relating to the refinance scheme, Dr Akhtar said that she had constituted a committee comprising of the representatives of SBP and Pakistan Banks’ Association (PBA) to make recommendations in this regard.

The governor advised the bankers not to indulge in driving interest rates and exchange rate based on mere sentiments and rumours. “Bankers should also take necessary measures to arrest the declining growth of deposits,” said the governor.