Banks fail to lend ‘surplus’ cash to businesses

Banks have been unable to utilise surplus liquidity as the federal government seems to have discontinued borrowing for now while the private sector is still reluctant to enter the money market, banking experts said on Monday. Even though the federal government has been the biggest borrower of banking money, it has refrained from doing so after an injection of Rs2.7 trillion liquidity by the State Bank. “The surplus liquidity is waiting for the government to return after spending the huge supply of profit by the State Bank,” said a senior banker. He said the private sector was still not ready to enter the market despite a substantial decline in interest rate. The State Bank has slashed the interest rate by 450 basis points during the current fiscal year while more cuts are expected.