KARACHI: The State Bank of Pakistan (SBP) has said it has implemented a programme titled strategic framework for sustainable microfinance 2010 to 2015 in a bid to provide micro credit to cash-strapped small and medium enterprises.
“Small and medium enterprises (SMEs) have received a significant financial hit due to power failures, economic meltdown and poor law and order situation in recent times,” read an annual performance report for 2009-10 released by the SBP on Monday.
The sector received relatively lower credit provision compared with the recent past and the central bank has taken several initiatives to improve the availability of finance to the SMEs, it added.
The report asserted that the central bank has taken interest in ensuring soundness of the financial sector. To this end, some of the areas emphasised by the SBP during fiscal year 2010 include putting in place macro prudential framework, strengthening capital adequacy framework, review of provisioning requirements, strengthening of risk management systems and models.
The central bank revised its vision statement and devised a strategic plan for 2011 to 2015, according to the report. It highlighted various initiatives, including the introduction of interest rate corridor to help banks manage liquidity, higher frequency of monetary policy announcements and open market operations, introduction of electronic bond trading platform.
While it termed the outgoing period ‘a year of recovery in growth and ease in inflationary pressures’, the report asserted that the central bank has adopted a cautious approach by keeping the discount rate unchanged at 12.5 per cent in view of the resurgence of inflationary pressures and uncertainties in fiscal and quasi-fiscal indicators.
Central bank profit down
Net profit of the central bank decreased seven per cent to Rs186,736 million in financial year 2010 from last year’s Rs201,698 million.
Decrease in net exchange gains on the bank’s foreign currency assets and liabilities coupled with a marginal decline in discount income from market treasury bills caused the decrease, the report cited.
The fall in profitability emanated not just from a drop in the bank’s total income to Rs208,793 million from Rs219,925 million in fiscal year 2009 but also due to the increase in expenses which went up to Rs22,057 million against last year’s Rs18,227 million.
Commission earned by the SBP for handling public debt securities and government financing instruments also declined by 13 per cent during the same period. Total assets held by the central bank rose Rs325.3 billion to Rs1.711 trillion while liabilities also rose by Rs286.7 billion to Rs1.295 trillion; bringing SBP’s net assets to Rs416 billion.
Published in The Express Tribune, November 16th, 2010.
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