High borrowing from banks, SBP: government should mobilise funds from capital market, says Lawai

Summit Bank President Husain Lawai on Tuesday urged the government to mobilise funds from capital market instead of high borrowing from banks and the State Bank of Pakistan. Addressing the members of Karachi Stock Exchange on the occasion of "gong ceremony" of Summit Bank Limited here, Lawai said the government can generate required funds by floating short-term finance certificates.
He proposed that the government may float 9-month Term Finance Certificates (TFCs) on commodity base to fulfil its financial needs instead of costly borrowing from banks. This kind of source of fund generation will be cheaper than loaning from banking system, he added.
Lawai said a proposal has already been sent to the federal government and according to our expectations, interest rate on proposed 9-month TFCs will be Kibor plus one or two, which will gradually come down when the government will gain investors' confidence.
Talking about the banking sector, he said five large banks, having over 80 percent share in the market are rolling in profits. While, mid-size and small banks are facing several issues. Now, the smaller banks are facing tough time and under these circumstances, mergers and acquisitions is the best and right option for these banks.
He said Summit Bank, which was created after the merger of three small banks is rapidly growing and by the end of next year will be a mid-size bank. Summit Bank has launched a lot of new products, which will help grow more and more, he added. He also announced that Summit Bank is ready to provide a credit line of minimum Rs 50 million to KSE members. Talking about the economy, Lawai said the country's economy is facing several challenges and need some support from the nation. He urged masses to pay taxes in time to support the country's economy. Nadeem Naqvi, Managing Director KSE, Arif Habib, Zafar Moti and others were also present.