Banks in Pakistan are charging up to 29% interest rate to their borrowers despite the lowest 5.45% policy rate of the SBP (State Bank of Pakistan).
Policy rate is the interest rate on which SBP gives financial loans to commercial banks. Consequently, banks can charge an interest rate slightly higher than this to cover their expenses and potential business risks, but this slightly higher percentage has reached more than 23% which is very shocking.
Such interest rate parity between SBP and commercial banks was revealed in National Assembly where Parliamentary Secretary for Finance, Rana Afzal Hussain provided a written statement on behalf of Finance Minister Ishaq Dar while replying to a question asked by MNA Seema Mohiuddin Jamali.
The interest rates of the banks in the report were explained as WAORI (Waited Average Rate of Interest), that counts for the loan on agriculture, business, loan, housing, and salary.
Both Public sector and Private sector are offering loans on higher interest rates, starting from 7.72% by Habib Metropolitan Bank to the 28.8%, the interest rate charged by Standard Chartered Bank. Even the Islamic banks who have the profit rate charge at 13.11% Bank Islamic and Dubai Islamic Bank at 11. 65%.
Bank of Punjab, Sindh Bank and Bank of Khyber charge at 9.66%, 9.73%, and 10.23%.
First Women Bank offers loans at the rate of 18.44% which is highest among the State-Owned Banks.
Despite, such lower level of policy rates how an ordinary man can reap the benefits if the commercial banks are hell-bent on depriving people of their monetary resources in the name of interest.