KARACHI, July 4: The governor, State Bank, Dr Ishrat Hussain has cautioned the banks and financial institutions to engage competent people, develop right processes and acquire proper technology before entering into areas of lending for housing, agriculture, consumer financing, SMEs and infrastructure.
Dr Ishrat chaired the annual meeting of National Credit Consultative Council (NCCC) on Friday at the State Bank that proposed a Rs230 billion credit plan for 03-04 indicating a monetary growth of 11 per cent to achieve economic growth of 5.3 per cent and keep inflation at 4 per cent.
A press release issued on Friday evening quotes Dr Ishrat advising the banks to be “steady and gradual” in their approach of entering new areas.
But he urged the banks to come out of their traditional mindset and instead of confining to trade and corporate sectors they should enter into areas like housing, agriculture, consumer financing, SMEs and infrastructure.
He held out a firm assurance to bankers and businessmen of suitable amendments in the prudential regulations to facilitate lending in new areas.
The NCCC meeting, chaired by the governor, was attended by heads of all the banks, senior officials of the federal and provincial governments and leaders of business community.
The Rs230 billion credit plan proposed by the NCCC will be finally put before the Central Board of the State Bank of Pakistan for approval.
The credit plan projects net foreign asset build-up in the current fiscal year at Rs130 billion while net domestic asset of the banking system will expand by Rs100 billion. The government borrowing for budgetary support and commodity operations are stipulated at Rs15 billion and negative Rs6 billion respectively. Private sector credit will grow by Rs85 billion while Rs6 billion will be taken up by the public sector enterprises.
The NCCC expressed satisfaction over the monetary and credit developments during 02-03, particularly in the private sector, which showed more than four-fold increase over last year. The year 02-03 saw a monetary expansion of Rs289.3 billion which is 16.4 per cent which was entirely due to accumulation of net foreign assets to the tune of Rs300.5 billion. As against this massive NFA build-up, the net domestic asset declined by Rs11.2 billion due to higher retirement of government borrowings.
Earlier in the morning the Agricultural Credit Advisory Committee (ACAC) suggested an agricultural credit target of Rs65.5 billion for 03-04 which is 4.6 per cent higher than the target of last year and 17 per cent higher than the actual disbursement in 02-03.