Reduction of lending rates hailed

by Shirajiv SIRIMANE

The request by the Central Bank to all banks to take measures to reduce interest rates on lending by the end of October 2010 will have far- reaching benefits on the economy.

The Central Bank said though it had eased its monetary policy stance by reducing the policy rates since February 2009, the country's banks are yet to show full downward adjustment in their rates.

Chief Executive and General Manager, People's Bank, P.V. Pathirana said that this decision will spur economic development and create a new breed of entrepreneurs. He said it would also help existing industries to upgrade themselves, to add technology to their existing business and meet the present and future demands.

With the ending of the war, people were more relaxed and are reaping the benefits of peace.

This has also helped them to think of new opportunities and the low interest rates would help them to convert their ideas to reality.

Pathirana said the People's Bank was created by the government, not only to earn profits, but also to act as a facilitator to spur economic development and they were happy to offer credit for lower interest rates.

Head of Marketing, Deepal Abeysekera said that People's Bank paid over Rs. 7.2 billion as taxes and levy to the Government last year. "The balance profits were reinvested on the institution," he said.

He pointed out that when interest rates were lowered, more people would have the ability to take credit, resulting in a chain of other related activities which in turn would benefit the bank in a bigger way.

"When industries or housing projects are launched, they will provide employment and would also help the cottage industry in a major way," he said.

He said People's Bank has now disbursed Rs. 560 million worth of credit facilities for the Uturu Wasanthaya as micro loans.

He said that Rs. 1.5 billion has been allocated to be given as micro credit and 70 percent of this has already been given.

He said they have reopened their branches in Mullaitivu, Kilinochchi, Paranthan and Mankulam. "We already have 14 branches in Jaffna," he said.