As banks in the flagging economy of Pakistan struggle due to dwindling deposits and lack of investment avenues, one banker thinks the situation could have been worse had wise steps not been taken by SBP governor Dr Shamshad Akhtar.
She was able to convince commercial banks to keep lending rates at reasonable levels after the SBP had to increase discount rate in a bid to control soaring inflation, Munir Kamal, President and CEO, KASB Bank Ltd, said at a seminar on "National and International Economic Crisis" recently organised by the Southern Regional Committee of the Institute of Chartered Accountants of Pakistan (ICAP) at ICAP House, Clifton, Karachi.
"I must say giving the circumstances she did a fabulous job," he said, talking on national and international economic crises, which are haunting the whole world now. "Only because of her, KIBOR (Karachi Interbank Offered Rate) is where it was when discount rate was increased."
He cited intense meetings the SBP governor held with presidents of different banks to make them see the dire circumstances for the country. KIBOR, the interbank lending rate, had surged to an unprecedented 40 percent in October as fear of run on small banks marred the overall trust in the banking system. That happened at a time when the central bank was pursuing a tight monetary stance to curb soaring prices in the domestic market, a move that has attracted a lot of criticism as industrial growth is slowing, Kamal Munir said.
He said, while the high discount rate has made it hard for industries to borrow, it was imperative to control inflation, which is expected to be 17.5 percent here in 2009 against global average of 1.3 percent. Zubair Motiwala, Renowned Businessman and former President KCC&I and Syed Najmul Hussain, Partner KPMG Taseer Hadi & Co and Chairman SRC, ICAP also spoke at the seminar.-PR
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