State Bank of Pakistan (SBP) Friday injected over Rs 1 trillion into the banking system to reduce the widening liquidity gap. The State Bank conducted the Open Market Operation (injection) and received some 32 offers amounting to Rs 1.12 trillion for seven days at 6.51 percent to 6.60 percent rate of return. In response to the bids, SBP accepted 32 bids amounting to Rs 1.075 trillion at a 6.51 percent rate of return.
Market sources said since the beginning of this fiscal year banks are facing liquidity shortage as the federal government has imposed 0.3 percent withholding tax on transactions of over Rs 50,000 for non-filers. After the imposition of withholding tax, a large number of depositors are reluctant to deposit their money with banks, resulting in liquidity shortage. Last week, the SBP had injected the same amount into the banking system for one week.
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