The State Bank of Pakistan has announced a Rs 270bn bailout plan for the banks to ease the liquidity crisis being faced by banks. A few days ago Dawn had reported that banks were facing acute liquidity crisis and big banks had stopped lending to small banks which created a credit crunch. As a result of this credit crunch, small banks were finding it difficult to make big payments. Bank to bank lending has almost dried up and large banks have stopped lending to small banks.
There are rumors that some small banks may collapse because of this crisis and heavy defaults on consumer loans. Governor of State Bank has said on a number of occasions that banking system in the country was on sound footing and it was capable of absorbing shocks. Despite this there is an air of uncertainty.
The liquidity provided by State Bank will help in dispelling fears that some banks may wind up operations. I personally feel that there is very tough time ahead. The liquidity introduced by State Bank may not be able to improve the situation if the present situation continues. There is extreme pressure on rupee and people are converting rupee into dollar on an unprecedented scale.
The State Bank of Pakistan has announced a Rs 270bn bailout plan for the banks to ease the liquidity crisis being faced by banks. A few days ago Dawn had reported that banks were facing acute liquidity crisis and big banks had stopped lending to small banks which created a credit crunch. As a result of this credit crunch, small banks were finding it difficult to make big payments. Bank to bank lending has almost dried up and large banks have stopped lending to small banks.
There are rumors that some small banks may collapse because of this crisis and heavy defaults on consumer loans. Governor of State Bank has said on a number of occasions that banking system in the country was on sound footing and it was capable of absorbing shocks. Despite this there is an air of uncertainty.
The liquidity provided by State Bank will help in dispelling fears that some banks may wind up operations. I personally feel that there is very tough time ahead. The liquidity introduced by State Bank may not be able to improve the situation if the present situation continues. There is extreme pressure on rupee and people are converting rupee into dollar on an unprecedented scale.
Related
