Businessmen demand significant cut in policy rates KARACHI: The business community expects there would be a significant cut in the interest rates to boost growth through small and medium enterprise (SME) sector. “Reduction in the interest rate will be a great incentive for the economic uplift of Pakistan through small and medium enterprise (SME) sector,” said Ateeq-ur-Rehman, adviser banking at the Karachi Chamber of Commerce and Industry (KCCI) on Monday. The business community had requested the central bank to bring the rates down to at least seven percent, as the cost of doing business was already very high and the businessmen are finding it difficult to clear their liabilities, he said. “High cost of doing business continuously impacts the profitability of the small and medium size companies, which even results in equity erosion. Furthermore like in the past, net borrowing by the private sector from banks is negligible. On top of it, there is no incentive for easy term SME financing,” Rehman told The News. Higher inflation rate in the past had suppressed the purchasing power of customers and a significant reduction in the interest rate would facilitate progressive growth. Talking about the asset-based financing, the KCCI adviser said the interest rate at such high level was a main concern affecting the leasing company’s equity, recovery and booking of profit as against the losses. “Higher cut in the interest rate could bring visible growth in economy, as cheaper money could immediately accelerate investment,” he added. Rehman said the banks should not opt for frequent lending to the government and create space for the businesses to borrow. The net investment of Islamic banks declined and the nonperforming financing increased during the outgoing quarter, primarily because of higher rates, He said
Posted on: Tue, 13 Jan 2015 06:11:40 +0000
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