Islamabad: Women entrepreneurs on Wednesday called upon the authorities to rationalise the interest rate spread to revive ailing economy.
Interest rate spread, which is 100 per cent above the normal level, is good for banks only while it is disastrous for economy, said Samina Fazil, founder President Islamabad Women Chambers of Commerce and Industry (IWCCI).
Sole aim of the business community has been confined to contribute to the profits of banks as regulatory bodies seems uninterested in ensuring best banking practices, she said while talking to Dr. Murtaza Mughal, President of the Pakistan Economy Watch.
Samina Fazil said that lack of investment opportunities, frequent mergers, uncompetitive environment, privatization, collusion, and apathy of State Bank of Pakistan has given additional strength to the banking companies that are offering negative rate of return since long.
Banks, supposed to mobilise savings and finance economic activities, are merely focused on maximising profits in absence of proper accountability, she added.
Situation has transformed banking into most profitable sector of the country; she said adding that such a massive spread is hurting women who are frequently ignored by the banking companies on one pretext or other.
Borrowers, depositors and the whole country is paying price for the excessive desires of uncontrolled banking sector, Alia Akram, President IWCCI noted.
State Bank of Pakistan shouldn’t forget its responsibility to keep banking system efficient and competitive and save depositors and borrowers from exploitation, the business leader said.
Banking system is contributing towards declined saving rate; unjust distribution of wealth, widespread poverty and controversial monetary policies, said Vice President IWCCI Naima Ansari.
Disrespecting sources of profit is against the ethics of any business she said adding that intermediary costs (difference between the cost of borrowing and return on lending) as are illogical and oppressive in Pakistan’s imperfect market, they said.
At the occasion Dr. Murtaza Mughal said that improving the policies of financial sector should be taken as a challenge. He said that high-cost capital can never encourage investment or support economic activity.
Low and stable inflation encourages investment and promotes while high inflation can retard GDP growth if it stays above the 5 per cent threshold, said Dr. Mughal.
Authorities should engineer soft lending to revive economy, he demanded. Stubborn inflation should not be allowed to change people’s perception about effectiveness of monetary policy therefore there is a need to fine-tune guiding principles.
For more information, contact:
Islamabad Women’s Chamber of Commerce and Industry
Mobile: +92323 5343199
Tel: +9251 2252256