Interest rate cut increased earnings of banks: PEWOctober 10, 2015
KARACHI: The Pakistan Economy Watch (PEW) on Sunday said reduction in the interest rates by the State Bank has increased the profits of the banks.
Government is the biggest custome of the banks which has received loans to the tune of 6.2 trillion rupees leaving productive sector in a lurch, it said. The profit of banks jumped by 113 percent in the first six months of the year which is 52 percent more than the previous year, said Dr. Murtaza Mughal, President PEW in a statement issued from Islamabad.
Last year banks earned an interest of Rs 255 billion while in the current year the banking companies made Rs 495 billion in six months, he added. Dr. Murtaza Mughal said that banks of twn trillion rupees as deposits in which three trillion are in the current accounts while rest are in saving accounts.
Banks prefer current account over saving accounts to maximise profit which the depositors of the saving accounts get negative return. He said that top officials of the banks prefer to please shareholders and increase their own perks and privillages because regulator continue to play role of a silent spectator.
The latest technology is adopted to reduce effort and costs but in the case of banking companies it is otherwise as the cost of services continue to increase without any justification.