Sharp liquidity tightening could usher in new prudent banking era

With the overnight interbank lending rate falling back to 6 percent, from previous highs of above 13 percent, analysts and economists are of the view that the worst of the banking sector's recent credit crunch appears to have passed.

But the pressure on banks to improve their act will continue to build, after the government came out in the open for the first time earlier this week to urge them to better manage their liquidity positions instead of counting on the central bank to save them, whenever they get themselves into a tight spot.