June 03, 2009 (LBO) – Sri Lanka’s Pan Asia Bank said it had slashed its interest rate on credit cards to 30 percent a year from 42 percent to ease repayment difficulties and the burden on consumers whose spending has declined. The bank also noted how other countries like the USA, are taking action to reform credit card practices.
“Legislative efforts are aimed at stopping credit card companies from imposing certain late fees, restricting retroactive rate increases, as well as other questionable billing practices.” The present outstanding of credit card utilization of all banks exceeds 35 billion rupees, the bank said in a statement.
The average interest charged by banks from the clients varies from 40 percent to 50 percent a year.
The bank said its decision to cut interest rates was in line with the downward trend in government policy rates and inflation.
Consumer spending has fallen in Sri Lanka owing to the economic slowdown and bad loans in the financial sector are also on the rise.
Tight central bank monetary policy has brought down inflation to single digit levels after it hit almost 30 percent in the middle of 2008.
Pan Asia said it was also responding to central bank requests to banks to