Drop in interest rates an election gimmick: UNP
The main opposition UNP yesterday charged that the President’s order to state banks to reduce interest rates was just an election gimmick to keep the populace happy and predicted that the rates would go up as soon as the election was over.
At a press conference yesterday, UNP National Organizer, S.B Dissanayake said that the reduction of bank rates will only offer short term relief but would be detrimental to them in the long run. He said the sudden reduction in interest rates will only increase the demand for loans to such an extent that the banks cannot satisfy the demand and will crumble under the strain.
“The government will not be able to satisfy the sudden increase in demand for loans and will eventually have to limit the number of the loans given, at which point these loans will only be given to government employees, conmen and persons with political affiliations,” Mr. Dissanayake explained. The main intention of this move he said is to attract the attention and the favor of businessmen so that they will fund the government’s election drive.“Of the 13-14% charged by banks as interest from depositors about half is used to things like the wages of their employees. So, with the reduced interest rates banks are going to find it hard going in the future” he said. “At this rate all banks will be faced with foreclosure such as what happened to the Golden Key Credit Card Company, although we don’t want see it happening on such a large scale.”