July 15, 2006	Saturday	Jumadi-ul-Sani 18, 1427

KARACHI, July 14: The State Bank on Friday directed all banks and DFIs to make complete disclosure of the lending and deposit rates of all consumer products offered by them.

This decision may reduce the complaints from the depositors that the banking spread is much higher than what they get back as interest. Banks used to say that depositors should search for products with better returns and which are available in the market. However, the State Bank believes that the bank clients were not informed properly about the banking products and return on them.

“In order to create awareness and to facilitate the public in making decisions, it has been decided that banks and DFIs will make complete disclosure of lending and deposit rates of all consumer products by posting this information on their website as well as prominently displaying on entrance or window of their branches,” said a circular issued by the SBP.

In order to facilitate comparison, banks and DFIs would also disclose annualised percentage rates on all consumer products.

In case of deposits the expected rate of return under the PLS system will be clearly indicated for each tenure. For lending products banks and DFIs will also clearly indicate whether the rate is fixed or floating.

The circular says in case of floating rate, in addition to mentioning the existing rate, the information regarding the tenure of the benchmark (Kibor or any other rate plus a pre-defined spread) used and periodicity of re-pricing should also be disclosed.

The banks and DFIs will also take adequate measures to inform their customers about the intricacies of ATM, Credit Card and their charges as well as the cardholders’ obligations.

Complaints about the ATM and credit cards are rising particularly overcharging and late-fee despite not being late by almost all banks. Banks do not mention to the customers that insurance fee is being charged.