FPCCI flays rising banking spread

Published September 6, 2008

KARACHI, Sept 5 Pakistan's apex trade body, the Federation of Pakistan Chambers of Commerce and Industry, has taken strong note of widening of banking spread to 7.05 per cent which is helping banks to earn more profits, push up inflation, increasing the cost of doing business and keeping prospective investors away.

In a statement here on Friday, FPCCI President Tanveer A. Sheikh said that banking spread in the country was highest in the world. He quoted figures to show that banking spread in the US was 1.3 per cent, Japan 1.7 per cent, India 3.1 per cent, Sri Lanka 4.4 per cent and Nepal 5.5 per cent.

“Banking spreads are directly related with the markup income of the banks,” the FPCCI chief observed to point out that in last couple of years the markup income of banks had increased considerably because of widening of the spread.

He asserted that banking spread had a direct bearing on the inflation and illustrated his point by saying that in the year 2001-02 the inflation was only 3.5 per cent as spread was only 5 per cent. Now that banking spread is 7.05 per cent, the inflation is 14 per cent.

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