KARACHI, July 25: A major local bank cleared by Privatization Commission as a prospective bidder for state-run United Bank is making desperate inquiries in the inter-bank money market for six-month clean borrowing.

Banking sources say the bank concerned is ready to pay higher than normal interest to the lenders but most banks are avoiding lending fearing that the borrowing may be for the purpose of UBL takeover.

“The bank concerned made desperate inquiries for borrowing but we thought it would be prudent not to lend,” said treasurer of a major foreign bank. Treasurer of a state-run bank made a similar statement.

Both said they refrained from lending to the bank in question because they knew that Privatization Commission has told it not to use the depositors money to buy state-run UBL. They said they were avoiding lending despite the fact that the bank concerned is ready to pay 6.75-7.0 per cent for six-month clean lending whereas the normal rate is a little lower.

“We fear we may be questioned by the government if we lend to the bank concerned and it uses the borrowed amount to buy United Bank Limited,” said treasurer of a foreign bank. “Because ultimately it is the depositors money that is with us.”

Banking sources said some small private banks have lent a few hundred million rupees to the bank in question believing that the borrowing is just a routine affair.

No senior official of the bank that has been out to borrow six-month funds could be reached immediately but one dealer at the bank did confirm that his bank was trying to make clean borrowing from the inter-bank market. “I do not know if this has anything to do with United Bank Limited takeover,” he said.