KARACHI - President, Federation Pakistan Chambers of Commerce and Industry (FPCCI) Tanvir A. Sheikh has strongly reacted to the demand of Commercial Banks for further raise in interest rate. He, in a press statement issued here on Thursday , said that 7.08 percent banking spread in Pakistan is the highest in the region. Banking spreads are directly related with the mark up income of the banks. During the last couple of years , banking sector earned significant mark-up income on the basis of high spreads. He stated State Bank of Pakistan has already increased its discount rate by 250 basis points in less than a quarter, which is very unusual practice for any Central Bank in the world. He also stated that Reserve Bank of India (RBI) has been following the contractionary monetary policy for the last two years to control inflation. But the way of using such policy is quite different as compared to SBP. The RBI did not raise its discount rate from 6 percent during last year but only changed cash reserve requirement (CRR), Statutory Liquidity Requirement (SLR) and repo rate whereas SBP has fully focused on raising discount rate. As a result of this Indian investment is rising sharply while growth of manufacturing sector in Pakistan is facing liquidity problem. The cost of doing business in our country is rising which discourages the investors to invest in Pakistan because investment is sensitive to interest rate hikes. In these circumstances , the demand of commercial banks to further increase the interest rate will further increase the cost of production which would made our products uncompetitive both in national and international markets. He disagreed with the argument of commercial banks that due to high inflation banks have to increase their interest rate to facilitate the depositors. He said the deposit rates offered to individuals remained abysmally low and emphasized on the need for shifting benefits to depositors, Commercial Bank must reduce their spread. He also demanded that SBP must enforce the commercial banks to narrow down the gap between lending and deposit rates to provide better return to the depositors.