The private sector received bank loans of Rs. 489.5 billion.

ByShehryar Makhdoom
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Due to financial support from the banks during the remaining 11 months of the current fiscal year (July 2020 to May 2021), loans to the private sector rose by 69.5% to Rs. 489.5 billion over the same period last year, when there was no bank support.

Reinstatement of a low-interest rate environment, along with economic growth, has been the main reason for the increase in GDP statistics reported by the State Bank of Pakistan (SBP).

Approximately $233 billion out of these total disbursed loans were lent by traditional banking branches to private firms. Last year's recorded loans of Rs. 82.272 billion are almost three times the amount borrowed this year.

Following SBP chairman MirHasan Riaz's presentation to the press, the SBP announced that the country's macroeconomic outlook had improved for the current fiscal year because of higher economic activity and the completion of the vaccination rollout and the reactivation of the IMF's loan programme.

Accordingly, Islamic banking facilities lent around Rs. 112.9 billion to the corporate sector in 2016, about double the amount that they lent in 2015.

Consumer loans, working capital, and fixed investment all grew, and this led to an increase in private sector credit. In addition, the use of the SBP's Long Term Financing Facility (LTFF), the Temporary Economic Refinance Facility (TERF), and greater export-related company activity have all contributed to increasing bank lending demand.

Additionally, the SBP maintained its policy rate at 7% for the fifth straight month, according to the most recent announcement on 28 May.

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