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Below is the excerpt of the news published in Daily Dawn
KARACHI, March 7: Governor State Bank of Pakistan Salim Raza underlined the need to promote bond market to meet the funding requirements of smaller sectors in the country.
He was addressing the members of Leasing Association of Pakistan and Modaraba Association of Pakistan here on Saturday.The governor said that bond market was 15 per cent of the total banking sector in India and China while it is less than one per cent in Pakistan.
He said that the bond market can cater to requirements of Islamic banks, leasing companies and other sectors and serve as alternative financial market.
Talking of higher interest rates, he said that the interest rates needed to be high. However, in my opinion higher interest rates “heighten” monopoly of the banks. It affects price of the credit but not the quantum of the credit, he added.
Salim Raza said that Pakistan’s economy, including the banking sector was strong enough to survive the brunt of international financial crisis, but it will affect the inflow of capital in the country in future.
“Financial crisis has in fact helped Pakistan in a way that our imports have fallen considerably due to plunging commodity prices, including crude, edible oil and other commodities,” he added.
Referring to recent report of ‘The Economist’ he said that capital flow from developed nations towards emerging markets has fallen from $920 billion prior to global financial crisis to $165 billion, showing a drastic cut of $800 billion. This will have a hit on capital inflow in Pakistan, he observed.
Dawn Sunday, March 8, 2009 Page 9
