Private Sector Borrowing Up by 194% in 6 Months : AsiaNet-Pakistan

Private Sector Borrowing Up by 194% in 6 Months

January 13, 2022 | | Share:

State Bank of Pakistan’s (SBP) data has revealed that private sector borrowing from banks crossed an all-time high of Rs. 1 trillion during the first half of the current fiscal.

The private sector borrowed a total amount of Rs. 1.013 trillion from July to December 2021, up by almost 194% compared to Rs. 344 billion during the same period last year.

Commenting on the growth of the credit off-take by the private sector, bankers said that it was certain that a new record would be set.

They further remarked that the rapid growth in borrowing could cause an unanticipated high growth rate of the economy.

The borrowings of the private sector in the current half-year are greater than the total borrowings during the entire fiscal year 2020-21. The private sector had only borrowed Rs. 766 billion in the previous fiscal year. Whereas, during the fiscal year 2019-20, the figures were recorded at Rs. 162 billion only.

Conventional banks played a vital role as the borrowing from the banks increased significantly. Private sector borrowing from commercial banks was recorded at Rs. 706 billion during the first six months of the current fiscal year compared to Rs. 199 billion during the same time in the previous year.

Islamic Banks also contributed to this growth as the credit off-take by the private sector from Islamic Banks increased to Rs. 124 billion compared to Rs. 82 billion in the half-year of the previous fiscal year.

Islamic banking branches of conventional banks loaned Rs. 183 billion to the private sector during the six months of the current fiscal year against Rs. 62 billion in the corresponding period of the previous fiscal year

The growth in borrowing by the private sector is unexpected since the interest rate has increased during the last quarter of the calendar year to 9.75 percent.

Source: Pro Pakistani

Category: Business