KARACHI - The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Tuesday called for reduction in taxes and improved regulations governing the banking system in order to strengthen the latter so that the economy could become stronger.

“A strengthened banking system is must to cater to the needs of businessmen and farmers and for the success of various mega projects, including China-Pakistan Economic Corridor (CPEC),” said FPCCI President Abdur Rauf Alam.

Talking to a delegation of bankers, he said that improved tax structure and relaxations for the banking companies could become a mean to reach out to unbanked population, increase agricultural loans, improve project financing and investment in human resource besides upgrading technology.

“Banks should brace for changed scenario to equip their human resource with latest technology and embark upon regular capacity building of the employees,” he stressed.

Abdur Rauf suggested the government should prefer facilitation of Islamic and microfinance banks to boost the SME sector, which encompasses around 96 percent businesses, and by focusing on which many countries had climbed the ladder of success.

“Presently SME sector is facing many problems, out of which lack of financial resources are on the top,” he said, and added, “Lack of financial resources has retarded the growth of this sector.”

The FPCCI president pointed out that since some of the laws were unclear, growth of the banking sector suffered on account of this, while different rates of sales tax in different provinces had also emerged as an issue for the industry.

“Around three years ago, 10 percent people had bank accounts, while now the ratio has dropped to nine percent, which indicates that cash economy is growing which should be tackled by all the stakeholders,” he asserted.

He hoped that the government’s decision to allow banks to conduct business with Iran would improve bilateral trade and reduce smuggling.