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SBP seeks views of stakeholders on interest rate

KARACHI (November 23 2003): The State Bank of Pakistan (SBP) has drawn up a 15-point questionnaire to solicit views of stakeholders on the interest rate structure in Pakistan. Part I of the questionnaire is for the private sector.

Views of the stakeholders have been sought by the Chief Economic Advisor, State Bank of Pakistan, M.Ashraf Janjua.

Some of the questions, which relate to different areas, are:

— Inflation rate is about four percent. What in your opinion should be: (a) Minimum rate of return on one-year deposits with banks and (b) minimum rate of return on one-year bank advances.

— State Bank's subsidised credit to agriculture, LMM (export) and export has been linked to Treasury bill rates. Are you satisfied with this policy? If not, what alternative would you suggest.

— What in your view should be the size of margin between the refinance rates, charged by the SBP and the rates charged to the ultimate borrowers in case of (a) export finance, (b) LMM (export), (c) LMM (local sales), and (d) agriculture credit (Zarai Taraqqiati Bank Limited (ZTBL) and Punjab Provincial Co-operative Bank).

— It is observed that because of comparatively low rate of return on bank deposits, these deposits are flowing away from the banking system. If yes, which of the these is the most attractive option for savings and why? – National savings schemes, informal sector, stock exchange, and real sector and precious metals.

The stakeholders have further been asked to rank the following groups of banks in terms of efficiency and services:

— Nationalised commercial banks, privatised banks, new private commercial banks and foreign banks, etc.

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