Interest Push

Policy makers could slap on a windfall tax on commercial banks if they dont narrow their interest rate spread within six weeks.
Prof. G.L Peiris told reporters on Thursday that commercial banks are slow to comply with the governments strategy to achieve single digit lending rates. rn

rnIn addition, Prof. Peiris says the wide interest rate spread was helping the banking sector post an average 200 per cent profit growth over last year. rn

rnProf. Peiris says if the banks dont act voluntarily to reduce lending rates further, the Economic Policy Committee will develop countermeasures, including the possibility of bringing legislation to take away the profits the banks are making due to the steep fall in rates in the recent past. rn

rnSuch windfall taxes have been used by Britain against privatised power utilities that made profits due to their own efficiencies, but were slow to pass on the benefits to consumers.rn

rnThe steep fall in interest rates is a direct result of the governments strict expe