Karachi, May 25, 2015 (PPI-OT): Whilst appreciating the reduction in discount rates by the State Bank of Pakistan (SBP) in the monetary policy, the Union of Small and Medium Enterprises (UNISAME) has voiced concern for senior citizens and those depending on profits on savings in banks and financial institutions and having no other source of income.
President UNISAME Zulfikar Thaver has invited the attention of federal finance minister (FM) Ishaq Dar to the reduction in profit rates by the banks and National Saving Centres on term deposits by senior citizens and urged the FM to exempt the senior citizens from payment of 10% withholding tax on profit on savings and deposits to enable them cope up with the reduced rate of profit on their life time savings. It has become very difficult for them to survive as on the one side the profit rates have come down and on the other hand the prices of all items of food, clothing and medicines are increasing on a daily basis.
He said over a period of time the profit rates paid by banks has been reduced considerably as against inflation and depositors are finding it difficult to survive. Thaver said it is incumbent upon the welfare state to look after its senior citizens, widows and minors and urged the FM to consider this shortfall in income and more so due to increase in the prices of kitchen items, consumer goods and also durables.
He said this will also discourage savings and it is also apprehended that the senior citizens depending only on profit on savings will start drawing from their savings to cope up with the expenses and may finish their savings. Thaver invited the attention of the FM to the increasing prices of food, clothing, medicines and education and appealed to the FM to lessen the burden on the senior citizens by lowering the withholding tax on profits on savings accounts, regular income certificates, special savings certificates and other schemes to 5% instead of 10% to support the senior citizens.
Secondly he pointed out that commercial banks be directed to increase the profit rates for senior citizens as a special social responsibility gesture to support them. The banks are enjoying a big spread against borrowing and lending rates so a little extra profit giving to senior citizens will not be a big reduction in their own profits.
Thirdly he requested the SBP to allow the micro finance banks to include the small entrepreneurs in their agenda as the commercial banks are not comfortable in financing the small whereas the micro finance banks are well versed in catering to the needs of the micro enterprises and the small but it is important that the limit of lending to micro enterprises and the small by the micro finance banks be increased to Rs one million instead of half a million and all caps be removed to facilitate the small entrepreneurs, the home based and cottage industries.
For more information, contact:
Union of Small and Medium Enterprises (UNISAME)
75/1 3rd Commercial Street,
Phase IV, D.H.A., Karachi, Pakistan
Cell: +92-300-8245307, +92-321-8245307