KARACHI - President National Bank of Pakistan Syed Ali Raza has disclosed that 95 per cent of the total remittances go to the family maintenance. In other words, 95 per cent of the remittances are utilized by the family members of the expatriates for their routine expenditures while the saving from the remittances is very low. The NBP President disclosed this in an exclusive interview to The Nation. He pointed out that only a very small amount of remittances is saved by the family members of the overseas Pakistanis. Ali Raza also pointed out that the credit cycle of the banking system is expected to gain momentum during the second half of the FY09 after the disbursement of non-IMF credit availability. He said that non-IMF loans, which are expected to be received soon from some bilateral and multilateral lending institutions, would strengthen the banks' liquidity position. It would also create credit funding facility for the sector in CY09, he added. As a result of these developments, around 80b rupees can easily be come into banking credit system hence banks would be able to fund the probable strong credit demand of the private sector. The government has started retiring its borrowings from the scheduled banks since this month. He said that the banking sector was solvent and stable despite the fact that the banks have faced tough liquidity constraints during the month of October CY08. "The extraordinary liquidity shortage in the banking system have been eased off. Now, Banks have more reasonable position in liquidity management and can actively participate in credit expansion activities and make investments in accordance with the private sector credit demand, he said. He also said that resource weaknesses being witnessed in the system had encouraged liquidity constraints and pressures. However, owing to fall in the prices of raw material at international market and high interest rate environment, the credit demand from the private sector might witness deceleration in upcoming quarters of this calendar year as compared to CY07-08. President National Bank also anticipated decline in the discount rate and inflation in this calendar year. He said that inflation has gradually decreasing and it could squeeze sharply by year-end, leading to a significant cut in the mark up rates. NBP President further said that in next two years the banks would focus on lending for the development projects, especially agricultural and industrial sectors. In the past few years the banks have focused mainly on the consumer financing, but now the financial institutions would have to lend money for the projects that play an important role in the development and stability of the economy.