On the following day i.e., Dec 8, the SBP again failed to pick up the liquidity, as the banks continued to seek higher returns on Treasury Bills. The SBP wanted to lift Rs19.6 billion through the Open Market Operation, but the banks again asked for higher returns.
Most of the liquidity belonged to only two banks and they were in a sound position to dictate their demand for higher returns.
On December 9, the SBP raised Rs800 billion out of the bids offered Rs16.55 billion, through OMO, as the rates slipped below 8 per cent. The SBP put pressure on the money market to come down and the market finally fell to 2-2.5 per cent for overnight rates.
According to the Statement of Affairs of the State Bank of Pakistan, for the week ended July 2November 26, 2005, both notes in circulation and those issued declined further during the week. Notes in circulation stood at Rs779,173.330 million against earlier week’s figure of Rs784,081.161 million, a fall of Rs4,907.831 million. When compared to the corresponding week a year ago when it was Rs701,448.763 million, the current week’s figure is higher by Rs77,724.567 million.
Total notes issued also fell in the current week over preceding week’s level. At Rs779,316.845 million it was smaller by Rs4,925.478 million over the figure of Rs784,242.323 million recorded a week earlier. In the corresponding week last year it amounted to Rs701,582.154 million, which shows current week’s figure to be higher by Rs77,734.691 million over last year’s corresponding figure.
Approved foreign exchange declined further in the week to Rs412,858.026 million or by Rs6,301.459 million over preceding week’s figure of Rs419,159.485 million. When compared to the corresponding week a year ago, when the figure was Rs457,872.722 million, the current week’s figure is smaller by Rs45,014.696 million.
Balances held outside Pakistan in approved foreign exchange increased in the week under review. It stood at Rs144,768.246 million over preceding week’s figure of Rs144,374.370 million, showing a rise of Rs393.876 million. Compared to last year’s corresponding figure of Rs125,499.804 million, the current week’s figure is larger by Rs19,268.442 million.
Loans and advances of scheduled banks to the three sectors – agricultural, industrial and export showed a mixed trend in the week under review. The agricultural sector received Rs60,714.062 million similar to preceding week’s figure. The current week’s figure is larger by Rs2,327.368 million over last year’s corresponding figure of Rs58,386.694 million.
There was an inflow of Rs2,100.494 million to the industrial sector during the week under review, a rise of Rs6.363 million against preceding week’s figure of Rs2,094.131 million. When compared to last year’s corresponding figure of Rs1,185.884 million, the current week’s figure is higher by Rs914.61 million.
The export sector received Rs103,543.855 million against previous week’s figure of Rs103,583.846 million, a fall of Rs39.991 million. Current week’s figure was larger by Rs6,528.377 million over last year’s corresponding figure of Rs97,015.478 million.
According to the weekly statement of position of all scheduled banks for the week ended November 26, 2005, deposits and other accounts of the scheduled banks stood at Rs2,483.395 billion, having risen by Rs25.124 billion over preceding week’s figure of Rs2,458.271 billon. Commercial banks deposits showed a rise of Rs25.177 billion over the week to Rs2,470.906 billion against preceding week’s Rs2,445.729 billion, while of specialized banks it fell by Rs0.054 billion to Rs12.489 billion, over previous week’s Rs12.543 billion.
Borrowings by all scheduled banks during the week decreased over preceding week’s figure. It fell to Rs293.708 billion over preceding week’s figure of Rs296.228 billion, a fall of Rs2.52 billion. This was primarily due to decline in the borrowings by commercial banks, which fell to Rs211.562 billion against previous week’s Rs214.101 billion, a fall of Rs2.539 billion, while borrowings by specialised banks fell to Rs82.147 billion over preceding week’s figure of Rs82.127 billion, a fall of Rs0.02 billion.
Gross advances stood at Rs1,941.819 billion in the week under review, a rise of Rs19.473 billion over preceding week’s figure of Rs1,922.346 billion. Advances by commercial banks rose to Rs1,831.477 billion against earlier week’s figure of Rs1,811.706 billion or by Rs19.791 billion.
Investments of all scheduled banks declined in the week by Rs35.629 billion to Rs697.669 billion against preceding week’s figure of Rs733.298 billion. Commercial banks investment level fell to Rs687.101 billion, from earlier week’s Rs719.593 billion or by Rs32.492 billion, while of specialized banks it stood at Rs10.568 billion against previous week’s Rs13.704 billion, a fall of Rs3.136 billion.
Cash and balances with treasury banks of all scheduled banks increased by Rs9.178 billion during the week to stand at Rs233.678 billion against earlier week’s Rs224.500 billion. The figure for commercial banks rose to Rs231.962 billion against preceding week’s figure of Rs222.780 billion, a rise of Rs9.182 billion. For specialized banks the decline was to the tune of Rs0.003 billion to Rs1.717 billion, against earlier week’s figure of Rs1.720 billion.
Total assets of scheduled banks stood at Rs3,235.041 billion, an increase of Rs30.004 billion, over preceding week’s figure of Rs3,205.037 billion. Meanwhile, commercial banks assets stood at Rs3,125.897 billion, higher by Rs30.659 billion over previous week’s figure of Rs3,095.238 billion. Specialized banks assets fell by Rs0.655 billion to Rs109.144 billion against previous week’s Rs109.799 billion.