On Wednesday, during a Senate Standing Committee on Finance meeting in Islamabad, the Ministry of Finance expressed its opposition to raising policy rates.
They argued that a 1% increase in rates would result in an additional Rs600 billion in debt servicing costs. As reported by The News, the committee extensively discussed the effects of higher interest rates on businesses, with the chairman and other senators contending that the increased interest rates were not effectively curbing inflation.
SBP Deputy Governor Dr. Inayat Hussain informed the panel that the interest rate had been raised to combat rising inflation, and it had shown significant results in recent months. However, Senator Mandviwalla questioned the effectiveness of interest rates in controlling inflation and requested the SBP to provide a comprehensive report on this matter.
During the meeting, banks received strong criticism for their refusal to open accounts for parliamentarians under the pretext of politically exposed persons (PEPs). The committee was briefed on the challenges faced by PEPs in accessing financial services.
The SBP deputy governor mentioned that a system had been implemented, with a designated focal person in each branch to address such issues, but it had not yielded satisfactory results for unknown reasons.
The committee recommended that all banks be directed to activate dedicated officers for PEPs in all commercial banks, as previously instructed by the committee.