Government to reduce reliance on bank borrowings

Karachi: The government has planned to launch three new short term savings schemes to finance around PKR 100bn funds in order to reduce reliance on bank borrowings.

According to Alfalah Securities Limited, the new certificates would be of three months, six months and one-year maturity. The government is expected to offer 12-13% return on the savings accounts. Private Banks have shown concern on this step and fear that this interest rate might shrink the size of their deposits. During the past three years, national savings schemes had attracted a total of PKR 800bn, increasing the total portfolio to PKR 1.83trn (As on Mar 31, 2011). However, on the other hand, lesser government borrowing from banks might increase the availability of cheap funds for investors.

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