Pakistan’s central bank has injected slightly over Rs2 trillion into commercial banks for a more extended period of up to 70 days to help the financial institutions meet the growing financing demand from the government.
The government remains the largest borrower from commercial banks, as its reliance on borrowing is constantly on the rise amid a surge in interest payments against debt, an increase in the budgetary deficit in the post-flood era and an acute slowdown in fresh foreign inflows from bilateral and multilateral creditors.
The State Bank of Pakistan (SBP) reported Friday that it had injected Rs1.93 trillion into commercial banks for 70 days at an interest rate of 16.10% through open market operations (OMO). Besides, it has provided Rs100.65 billion at 16.24% for seven days.
The central bank has also supplied Rs40.5 billion to Shariah-compliant banks at a return of 16.09% for 70 days. It rejected Islamic banks’ bid for seven-day borrowing. Ismail Iqbal Securities Head of Research Fahad Rauf said, “OMO is a tool available with the central bank to manage liquidity within the banking system. SBP has injected the massive sum into banks to meet growing demand coming from the government”.
