Bank loans to the private sector during 11 months of the current fiscal year (July 2020 to May 2021) increased by 69.50 percent to Rs. 489.5 billion from Rs. 288.8 billion during the same period of last fiscal year.
The latest data released by the State Bank of Pakistan (SBP) shows that this increase had been due to rebounding economic growth, a low-interest rate environment, and the refinancing schemes that had been introduced by the State Bank of Pakistan (SBP).
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Of these total disbursed loans, conventional banking branches were responsible for lending Rs. 230.9 billion to private businesses. This is almost thrice as much as last year’s recorded loans of Rs. 82.272 billion.
On the other hand, Islamic banking branches had lent Rs. 112.9 billion to the corporate sector, up from last year’s recorded loans of Rs. 50.174 billion.
Private sector credit had increased on the back of higher working capital, fixed investment, and consumer loans. Furthermore, increased economic activity, higher export-related business activity, utilization of the SBP’s Long Term Financing Facility (LTFF), and Temporary Economic Refinance Facility (TERF), had also contributed to a higher demand for bank loans.
The SBP has also kept the policy rate at seven percent for the fifth consecutive time, according to the latest update on 28 May.
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The SBP had recently said in a statement that Pakistan’s macroeconomic outlook for the current fiscal year has improved due to better economic activity, along with vaccine rollouts and the reinitiation of the International Monetary Fund’s loan program.
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