State Bank of Pakistan not fixing interest rates: Ishrat
Pakistan Times Business & Commerce Desk

KARACHI: Governor State Bank of Pakistan (SBP) Dr. Ishrat Husain Tuesday advised businessmen community to reconcile with prevailing changes in banking sector.

SBP is not responsible for fixing interest rates. The market forces determine increase or decrease in interest rates following increasing competition among commercial banks. “In past banking system was governed by the government. There was no competition and international market rules were not applicable.

“Government used to allocate billions of dollars from budget to subsidize bank losses. Now except for National Bank of Pakistan (NBP) all banks are private entities, making decisions as per their respective requirements.”

Speaking to members of Karachi Chamber of Commerce and Industry (KCCI), he said fair competition forced banks to offer reasonable returns to depositors. The increase in deposits resulted in strengthening average lending power.

The banks clients started looking to other avenues for investment offering good returns like stock exchange and real estate business, he said.

Dr Ishrat said prior to 1999 only Zarai Tarakeati Bank was lending loans to farmers. In last few years Rs 108 billion loans were given to 1.1 million farmers, which increased demand of urea, fertilizer and seeds etc.●