SBP governor urges banks to rationalise average spread

Calls for focusing on private sector lending, deposit mobilisation.

KARACHI: State Bank of Pakistan (SBP) Governor Ashraf Mahmood Wathra has stressed upon banks to focus on private sector lending and deposit mobilisation.

In this context, he said that the average spread of all banks continues to remain high and should be reasonably rationalised.

“SBP shall review the position by the end of June 2015 and may take regulatory measures to lower the spread,” he added.

He stated this while addressing a meeting of presidents/CEOs of all commercial banks and DFIs at the SBP head office in Karachi.



The governor took stock of the operational activities and performance and issued important directives to enhance the efficiency of banks.

Discussing the condition of Islamic banks and its profitability, the governor highlighted that Islamic banks should reward their customers appropriately in line with their surging profits. “Banks were advised to come up with their own solutions or the SBP will apply Shariah-compliant measures to address the issue,” he said.

Wathra told the banks to improve their foreign exchange-related services for the small customers. “The staff needs to be appropriately trained and products developed to assist public in the easy execution of their genuine foreign exchange transactions such as fees or medical expenses,” he observed.

He advised that all possible measures should be taken at the institutional level to improve the quality of services. He said that the SBP will also review its foreign exchange circulars to facilitate the banks in this regard.

Urging the banks to realise the efforts required for maintaining foreign exchange reserves, the governor emphasised that banks should discourage import of non-essential items by reviewing their internal credit policies. On the other hand, he directed the banks to facilitate the exporters to the maximum to promote growth in exports and thus the economy.

He was also critical of the banks for inefficiencies of their overseas offices. “SBP has been receiving requests from different banks to have their representation overseas but on the contrary, performance of existing representative offices is not productive. Therefore, instead of having overseas offices, banks should perhaps consider subsidiaries in foreign markets as ‘exchange companies’ which may further help home remittances as well,” he elaborated.

Published in The Express Tribune, January 27^th,  2015.

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