Pakistan to cut bank lending rates

ISLAMABAD, Jan 4: Pakistan's Finance Minister Shaukat Aziz said yesterday bank lending rates would come down as a result of a cut made in returns on state savings schemes, says Reuters.

He said in a speech to a business audience at Rawalpindi, near Islamabad, that the cut in the returns of savings schemes "would soon be followed by a corresponding adjustment in the State (central) Bank auctioning rates and banks' lending rates through the market process".

Pakistani stocks began the New Year with a three per cent surge on Monday that dealers credited to hopes that the cut in returns on saving schemes, which took effect on January 1, would pump additional liquidity into the market.

The main Karachi Stock Exchange's 100-share index KSE ended 48.16 points, or 3.42 per cent, higher at 1,457.07 points.

The government cut the returns paid on fresh investments in Defence Savings Certificates from 16 per cent annually to 15 per cent and to 14 per cent from 15 per cent on regular income certificates.

Bankers said the rate charged on loans to the private sector was between 15 and 18 per cent.