Decreased interest rate will divert the flow of lending towards private sector – The government should avoid borrowing from commercial banks for deficit financing – SMEs sector should also be encouraged by lending from commercial banks – Says, Mian Adrees, President FPCCI

Chambers of Commerce

Karachi, January 26, 2015 (PPI-OT): The President FPCCI Mian Muhammad Adrees has appreciated the announcement of reduction in the rate of interest to 8.5% by State Bank of Pakistan in its Monetary Policy. Although the rate of interest is still not matching with other countries in the region however, it will encourage the investment process in the country by additional investment in the industrial assets, he said.

He further said that FPCCI has been emphasizing that conducive environment is essential for commercial and business activities in the country for which the reduced interest rate in one of most important factors. He expects that this step will divert the flow of lending of commercial banks towards the private sector. Mian Adrees further said that It is quite natural that decline in interest rate will lead to decrease in the rate of interest on short and long term lending. Consequently, the rate of export re-financing, BMR (Balancing, Modernization, Replacement), financing for working capital and rental on industrial assets will also be decline.

In order to get the desired positive result of lower interest rates in the monetary policy the President FPCCI suggested that government should avoid borrowing from commercial banks for deficit financing otherwise resources from commercial banks may be shifted to the public sector instead of private sector which will damage the industrialization.

Mian Adrees further said that SMEs are most important sector of the economy but it has always been neglected as lending to SMEs in Pakistan is less than 4% of total portfolio of lending. He suggested that SBP should ensure that flow of lending should encourage the SME sector as well.

For more information, contact:
M. A. Lodhi
Secretary General
Federation of Pakistan Chambers of Commerce and Industry (FPCCI)
B-1, Federation House, Main Clifton Road,
Shahra-e-Firdousi,
Karachi-75600, Pakistan
Tel: +92-21-35873691, 93-94
Fax: +92-21-35874332
Email: info@fpcci.com.pk
URL: www.fpcci.com.pk

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