On Wednesday, during a Senate Standing Committee on Finance meeting inIslamabad, the Ministry of Finance expressed its opposition to raisingpolicy rates.
They argued that a 1% increase in rates would result in an additional Rs600billion in debt servicing costs. As reported by The News, the committeeextensively discussed the effects of higher interest rates on businesses,with the chairman and other senators contending that the increased interestrates were not effectively curbing inflation.
SBP Deputy Governor Dr. Inayat Hussain informed the panel that theinterest rate had been raised to combat rising inflation, and it had shownsignificant results in recent months. However, Senator Mandviwallaquestioned the effectiveness of interest rates in controlling inflation andrequested the SBP to provide a comprehensive report on this matter.
During the meeting, banks received strong criticism for their refusal toopen accounts for parliamentarians under the pretext of politically exposedpersons (PEPs). The committee was briefed on the challenges faced by PEPsin accessing financial services.
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The SBP deputy governor mentioned that a system had been implemented, witha designated focal person in each branch to address such issues, but it hadnot yielded satisfactory results for unknown reasons.
The committee recommended that all banks be directed to activate dedicatedofficers for PEPs in all commercial banks, as previously instructed by thecommittee.
