Lahore - The Friends of Business and Economic Reforms (FEBR) on Sunday applauded the central bank for its positive initiatives and efforts to promote economic growth in the country, appealing the SBP to get its policies implemented fully in view of providing liquidity and financial support to businesses in post-corona pandemic situation. FEBR President Kashif Anwar said the SBP has taken a number of steps to mitigate the impact of Covid–19 on economic growth. Since the onset of pandemic-related economic pressure, the central bank has reduced policy rate from 13.25 per cent to 7 per cent, he said. He added that the central bank also allowed one-year extension in principal payments along with rescheduling and restructuring of loans without affecting the credit history of borrowers, which is right step in the right direction.

He said that with regards to the ease of doing business, the central bank has taken a number of proactive measures like encouraging banks to facilitate borrowers by offering products as per their needs and demands. The massive rate cut helps the federal government borrow at a cheaper cost from banks through the sale of treasury bills and bonds. Interest rate slashing also aims to help the government make large cash transfers to daily-wagers and bear the cost of refinance offered to banks that make subsidized loans to households and businesses. The best part of such refinancing to banks relates to the subsidized lending to big companies and small and medium enterprises (SMEs) for keeping their employees on payroll amidst the disruption in economic activities, which is really appreciable. He was confident that the SBP’s system was fully equipped to explore the untapped potential of local market but the commercial banks policies and strategies are not fully aligned with the central bank as they have different policies and priorities which need to be checked by the regulator.

Kashif Anwar hailed several other measures taken by the SBP to mitigate the impact of COVID-19 while stressing the importance of provision of business-friendly environment. “But the ground reality is that on one side government is striving for industrialization and on the other commercial banks are creating problems and red-tapism in loans provision,” he said. “Every bank has a standard policy, as most of the banks do not entertain the customers in their true spirit.”

It is good that the SBP has formed a Steering Committee on Housing and Construction Finance chaired by SBP governor to support government’s efforts to promote housing and construction sector and has assigned mandatory targets to banks to extend mortgage loans and financing for developers and builders. Kashif Anwar also called for simplifying construction loan policies and enhancement in their limits, as expenses have raised manifold.

The FEBR President said that the central bank had introduced a draft framework on risk management of trade-based money laundering and terrorist financing to enable transparency and efficiency across trading finance. The main aim of this framework was to strengthen the trade-related anti-money laundering, combating the financing of terrorism and combating proliferation regime and conserve foreign exchange. This framework is applicable to all banks who deal in foreign exchange but there are several issues here too which also need to be settled down to facilitate the exporters. The FEBR chief also stressed the need for speeding up the exporters’ drawback of local taxes and levies (DLTL) claims refunds to resolve their liquidity issues.