KARACHI: Private sector borrowing from banks increased 69.49 percent in 11 months of the fiscal year ending June 30, the central bank’s data showed on Tuesday, due to rebounding economic growth, low interest rate environment and refinancing schemes introduced by the State Bank of Pakistan. Banks disbursed Rs489.5 billion loans to private businesses from July 1, 2020 to May 28, 2021, compared with Rs288.8 billion in the corresponding period of the last fiscal year.
Conventional banking branches disbursed Rs230.9 billion loans to private businesses, compared with R82.272 billion during last year.
Islamic banks lent Rs112.9 billion to the corporate sector. That compared with Rs50.174 billion a year ago.
Private sector credit off-take from the Islamic banking branches of conventional banks increased to Rs145.6 billion from Rs156.4 billion.
Private sector credit is seeing an uptick driven by working capital, fixed investment and consumer loans.
The pickup in industrial production due to an increase in export-related activity in some sectors, utilisation of the SBP’s refinance facilities, especially Long Term Financing Facility (LTFF) and Temporary Economic Refinance Facility (TERF), contributed to the rise in demand for bank credit from businesses.
The SBP maintained a policy rate at seven percent for a fifth consecutive time on May 28.
Analysts are upbeat about the prospects for private sector credit in the upcoming fiscal year, as strong momentum shows recovery from the coronavirus slump supported by fiscal and monetary stimulus measures.
The government projects around four percent real gross domestic product for the current fiscal year. It is expected to set a growth target at 4.8 percent in the coming fiscal year.
The SBP said Pakistan’s macroeconomic outlook for the current fiscal year has brightened due to buoyant economic activity, vaccine rollouts and the re-initiation of the International Monetary Fund’s loan programme.
