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Financial institutions urged to reduce mark-up rates - LRE - 09-12-2008 10:58 AM
Financial institutions urged to reduce mark-up rates
ISLAMABAD (September 12 2008): The Islamabad Chamber of Commerce and Industry (ICCI) here on Thursday emphasised upon the financial institutions to reduce the markup rates on loans in the best interest of the economy.
Talking to a three-member World Bank delegation, President ICCI, Muhammad Ijaz Abbasi said that one of the ways to steer the economy out of current hard times was to encourage growth of trade and industry by facilitating bank loans for entrepreneurs on easy terms to establish more commercial and industrial units.
"However, presently the financial institutions are charging high mark-up rate ranging form 16-18 percent on business loans which is becoming hindrance in growth of economic activities," the ICCI president added.
The three member WB delegation comprising Ms Ann Christine Rennie, Lead Financial Sector Specialist (Private and Financial Sector) Shamsuddin Ahmad, Senior Financial Sector Specialist South Asia and Ms Claire Grose, a lawyer called on ICCI president.
Abbasi was of the view that high mark-up on business loans were discouraging the investment and industrialisation in the country because high mark-up rates on credit and many other factors like hike in gas prices, electricity, fuel, raw material and land taxes have increased the cost of doing business in the country.
He said that the financial institutions should offer long term business credit facility spanning over 8-12 years period to enable businessmen payback their credit easily. He also underlined the need for encouraging small and medium enterprises' sector by offering easy financial support, adding that this sector was proving engine of growth in most countries and has potential to flourish in Pakistan and create lot of employment.
He was of the view that so far main focus of financial institutions remained on promoting consumer financial in the country, however this trend should be changed and credit services should be launched for promoting capital investment in the country to expand the economy.
He also stressed the need for developing agriculture sector as 70 percent of the population was depending on this sector for livelihood and urged World Bank officials to offer long term soft loans for the development of this sector by using latest methods and technology.
Copyright Associated Press of Pakistan, 2008
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