KASB Bank: More banks show interest in due diligence

SBP says interest rate will not be cut only on the basis of oil price drop.


Our Correspondent December 22, 2014

KARACHI: State Bank of Pakistan Governor Ashraf Mehmood Wathra has announced that KASB Bank has not been closed and the issue will be resolved in six months as two banks are already engaged in the due diligence process, which may lead to a merger or acquisition.

“A third bank has also sought permission for evaluation of KASB Bank and two or three more financial institutions are in the process of negotiations in this regard,” he said while talking to traders at the Federation of Pakistan Chambers of Commerce and Industry (FPCCI).

Wathra claimed credit for the decline in inflation, saying the price fall was the result of central bank’s monetary policy stance over the last about one and a half years.

However, he reminded the businessmen that interest rate could not be brought down only on the basis of a drop in international crude oil prices and other factors had also to be taken into account. These included investment demand and supply, balance of payments position, trade projections and debt repayments.

“The central bank has cut the key policy rate in the last monetary policy and a further reduction could be considered in next policy reviews,” he said. “The monetary policy decision is taken by the independent board of the central bank on the recommendation of the Monetary Policy Advisory Committee, in which the private sector has its representatives.”

He acknowledged that investments by banks in government’s treasury bills and bonds stood higher than the benchmark of 1% of their assets. Still, banks have adequate funds available for the private sector and they will not deny credit requests of businessmen by saying they have parked money in government papers.

Talking about the incentives given to exporters, Wathra said the central bank had cut the export refinance rate and also offered rebate to the leading performers. For the rebate facility, Rs400 million has been set aside which is separate from the rebate given by the government.

Apart from this, the exporters are also provided long-term financing facility by the government.

The central bank has also reduced the refinance rate for small and medium-sized enterprises, which are provided 2.5% rebate by the government.

Published in The Express Tribune, December 23rd, 2014.

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COMMENTS (5)

Nasir Ahmed Panhwar | 9 years ago | Reply

Mr. Governor ! You have taken the worst decision of its kind by stopping the hard earning of innocent depositors without having any fault on their part,instead to punish the KASB management and Bank staff, who are the genuine culprits, you have choosen to kill the DEPOSITORS.

Eshal Rehman | 9 years ago | Reply

Dear Concern, the situation termed worst day by day and should be normalized as soon as possible rather six.months time which is too much fir depositors especially poors. Govt. Should merge KASB with NBP on immediate basis or speedy process and KASB management should not be given any options to let the bank merge with any other bank as they do not deserve rather capable to do so.

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