KARACHI: Government will collect tax from banks for issuing less private loans.
The government will levy an additional tax of 10 to 16 percent on commercial banks’ lending to the private sector below 50 percent of their deposits. Can be accelerated.
It should be noted that after the interest rate reached a record high of 22 percent in 2023, many businesses and households were unable to pay their debts and went bankrupt, and thus bad loans reached a 14-year high of Rs 62 billion.
A report by Topline Research states that banks with an advance-to-deposit ratio of less than 40 percent will pay 16 percent tax on their income, while banks with a ratio of more than 40 percent and less than 50 percent will pay tax on their income. A tax of 10% will be payable, while banks holding more than 50% will not be taxed.
Arif Habib Limited economist Sanatofiq said that the banks that have paid this tax in 2022 were exempted from this tax in 2023, however, they will have to pay this tax in 2024 because the exemption is only one. It was given only for the year.
He said that banks avoid taking huge deposits in December to show balanced ADR, which keeps their ADR ratio better, the government should develop a new mechanism in this regard and ADR ratio. should be checked on monthly and weekly basis instead of yearly.
It should be noted that due to high interest rates, banks often refrain from issuing loans, because the chances of repayment of loans given at high interest rates are low and debtors appear bankrupt.