Every year billions of rupees are paid to private banks by provincial governments who get loans for procurement of wheat and this practice should be shunned to save the taxpayers’ money, demanded Pasban Democratic Party (PDP) Chairman Altaf Shakoor here Sunday. He said that banking is an important segment of the economy but the private banks should not let themselves become new East India Companies to loot consumers and governments.
He said the government could save billions of the taxpayers’ money if it arranges funds from its own kitty to buy wheat instead of taking interest-based loans from banks. He said this practice seems a bid to give financial favour to the private banks at the cost of people. He said the money being paid to banks for interests on loans could be used on welfare of the poor masses. He regretted that the spread of the Pakistani banks is amongst the highest in the world.
Quoting a report, he said that Pakistan’s weighted average banking spread – the difference between the interest rate that banks charge on lending and the rate of return they pay on deposits – hit a two-decade high at 7.73% in the second quarter ended June 30, 2023. He said the weighted average banking spreads mark the highest quarter since at least 2004, rebounding from a low of 4.14% reported in the fourth quarter (Oct-Dec) of 2021. He said as per report the surge in banking spreads comes in the backdrop of the central bank’s benchmark policy rate reaching a historical high of 22%.
This sharp increase in interest rates has played a significant role in widening the spread. Altaf Shakoor said we are not against the banking system but against fleecing of consumers and governments by these profit hungry banks. He said the capitalist loot and plunder is at its zenith in poor countries like Pakistan and the private banks play a major role in it. He said pro-consumer banking reforms are overdue in Pakistan. He said that consumer courts are there in the country but the culture of protecting consumer rights is yet to flourish here.
He said the policies of the State Bank of Pakistan are heavily in favor of private banks and against the people of this country which should be rationalized at the earliest. He said both the governments and people are facing a deadly debt trap which should be broken at the earliest. He said sadly political parties don’t raise their voice for the rights of consumers in Pakistan.He said the elite class is given a free hand to loot and plunder at the cost of the poor masses.
He demanded of the central and provincial governments to lessen their dependence on bank loans and device mechanisms to avoid unnecessary bank loans, especially for things like the wheat procurement. He said saving taxpayers’ money should be the top priority of our rulers instead of wasting mercilessly.
