KP’s share in the country-wide bank deposits stood at around 14 per cent, whereas the total lending by the banks in the province came to just 1.7 per cent.

PESHAWAR: Short of liquidity amidst a prolonged armed conflict, the Khyber Pakhtunkhwa’s feeble private sector sees the State Bank of Pakistan’s recently brought down rate of interest with mixed feelings and little hope.

While the Khyber Pakhtunkhwa Chamber of Commerce and Industry’s president has appreciated the SBP’s rate cut decision because of its likely positive impact on the national economy, members of the business community are of the view that the move will not mean much for the businesses in KP unless the commercial banks and financial institutions put their existing KP-specific lending policy aside.

“There are banks local and foreign that have zero level lending in KP,” said KPCCI President Afan Aziz. He said the banks’ lending in KP should, at least, be in proportion to their deposits from the province.

He said KP’s share in the country-wide bank deposits stood at around 14 per cent, whereas the total lending by the banks in the province came to just 1.7 per cent. “This is injustice,” said Afan.

Similar views were expressed by industrialist Mohammad Ishaq, a former vice-president of KPCCI. He said the KP businesses were in need of equity with many requiring liquidity for modernisation and replacement of their old machinery.

A case in point, according to him, is of Buner’s marble industry. Many marble processing units, he said, required new machinery after suffering heavy property damages at the hands of militants two years back.

“The banks,” he said “have declared KP a red zone due to the armed conflict.” He said in some instances the banks asked for unreasonable high amount of collateral against the sanctioned loans.

“In one such instance the applicant was asked to provide a Rs50 million collateral against a Rs5 million sanctioned loan, leaving him with no option but to desist from borrowing the money,” said Ishaq.

However, the two leaders also saw a window of opportunity entailed under the SBP decision for the KP businesses.

“It would surely bring down the cost of doing business in KP,” said Ishaq. He also saw the move beneficial to the existing borrowers. It would provide them a breathing space, he added.

Afan said that the decision would help break the stalemate the KP businesses had been experiencing for quite some time. “It would help the government bring inflation under control, but the major difference would be made if the SBP brings down the interest rate to a single digit,” he maintained.