KARACHI, Oct 7: President of the Federation of Pakistan Chambers of Commerce and Industry Tanvir Ahmad Sheikh has demanded lowering of cash reserve ratio of the banks by State Bank of Pakistan to improve liquidity in the market.

He expressed concern over reports of serious liquidity crunch in the market as was reflected in an unprecedented interest hike on overnight call money rates and even bouncing of cheques by the banks in some cases. He recalled that the apex trade body had been raising its voice against tight monetary policy.

“The rise in the basic interest rates was the most damaging tool of the State Bank authorities that caused a severe liquidity contraction and affected adversely the productive sectors of the national economy.” He quoted figures to illustrate his point that the credit rates in Pakistan were one of the highest in the world, which have pushed up production cost. He attributed it to the vast bank spread in Pakistan.