Resignation of Kardar has affected banking sector, investors: FPCCI

ISLAMABAD: Governor State Bank of Pakistan (SBP) Shahid Hafiz Kardar’s resignation has added to worries of the business community, an official of the Federation of Pakistan Chamber of Commerce and Industry (FPCCI) said on Thursday.

The development has also sent negative signals to international lending institutions and other donors contributing to uncertainty among investors, said Raza Khan, Chairman Coordination, FPCCI while speaking to the business community at the FPCCI Capital Office.

He said that Kardar’s resignation can further delay talks with the International Monetary Fund (IMF), which were expected in August.

The move proves that the SBP was not allowed to work freely so that it can play its due role in improvement of the economy.

The finance ministry continues to dictate directives like financing unproductive expenditure through printing currency, which has resulted in sluggish economic growth and criticism on the regulator that has forced three governors of SBP to step down, he added.

Raza Khan said that forcing commercial banking companies to hold government securities has resulted in negative return to depositors and suffocation of the productive sectors, he said.

He said that this recent development suggests that the former governor was serious about reforming the economy but was not allowed to take up his leadership role while top government functionaries remain non-serious.

The rulers should take urgent steps to secure the banking and finance industry of the country which has been jolted by the resignation of Shahid Kardar, the FPCCI official demanded.

The government should develop interest in good governance, proper tax collection, right direction, capital formation and economic development and use private sector to accelerate the process of investment and growth.

Raza Khan called for efforts on the part of the government and commercial banks to bring the country out of slow growth and high inflation.

The government will never try to broaden the tax net to get maximum credit facility from banks, he said.

The new governor of SBP, Yasin Anwar, should only take charge if he is allowed to mobilise savings, finance the private sector and design policies for price stability while keeping monetary policy considerations supreme.

Copyright PPI (Pakistan Press International), 2011