The government has announced a reduction of interest rates for loans and overdrafts provided by state banks. This is certainly a welcome move. But to make this decision more effective and meaningful, there are other aspects to be reviewed closely.

When we examine the loan portfolios of a bank, we find that 50% of the portfolio belongs to gold pawning. Another 35% is allocated for credit cards and the normal loans and overdrafts are about 15%.

It is learnt that banks exploit the general public through credit cards. It is so with regard to private banks. They charge around 30% to 40% interest on credit cards. In addition, they levy various taxes like Debit Tax, Late Fees, Annual Fees, Stamp Duty and several other charges.

They even charge Rs. 900.00 to change an address. They go on exploiting the masses in a very unscrupulous manner.

Most Sri Lankans now use credit cards to balance their daily budgets, amidst the high cost of living. It is really a consolation for the poor man struggling to survive. But a close examination will reveal that their earnings are eaten into by private banks which offer credit card facilities.

In this regard, we have to appreciate the Bank of Ceylon and the People’s Bank who are very reasonable in extending credit card facilities. Therefore, we request the government to have some control over this type of exploitation. The government may request all banks to charge a reasonable rate of interest. The other deductions made by way of various taxes and levies should be uniform and reasonable. They should not be allowed to charge ad hoc levies, which are a curse.

In other words, such banks are passing on the burden of maintaining luxurious offices and premises to the poor consumer.

Today, a large number of wage earners use credit cards and pay the banks through their noses. It is true that credit cards are useful and easy. It is also true that banks should charge for the services rendered. But if they are allowed to exploit people as is the case at present, it will continue to be a curse on them. This is one of the reasons why wage earners cannot meet their ends and demand higher wages.

Therefore, we request the government to impose controls in this regard. They should be allowed to charge a nominal interest rate, but all other charges levied under various guises should be strictly controlled. They may even impose a percentage over which no charge should be made. Such restrictions should be made public.

Reducing interest rates will provide relief to the masses.

But only a very small percentage go for loans and overdrafts. Most people use the credit card as a short term loan. Therefore, if the government is genuinely interested in reducing the cost of living, they should strictly control unfair credit card dealings with immediate effect. Such action will be more useful and more meaningful to the suffering masses. The restrictions should be imposed on private banks and private finance companies rather than on state banks which deal with this type of transactions in a very reasonable manner.