The private sector’s borrowing from the banking system has surged to an all-time high level of Rs. 1.44 trillion in the financial year 2021-22 despite high interest/ profit rates charged by the commercial banks.
Banks’ credit to the private sector in Pakistan grew by 88 percent in the fiscal year 2022, as compared to the previous fiscal year. This is according to the State Bank of Pakistan (SBP).
The private sector’s increased borrowing was chiefly due to the economic rebound, which spurred investment in capital and operations by firms in sectors such as export-oriented businesses and large-scale industries.
The government’s borrowing from the conventional banking system increased to Rs. 850 billion in FY22 as compared to Rs. 270 billion, showing an increase of 214 percent or Rs. 580 billon year-on-year.
The financing from Islamic banks also increased significantly to Rs. 239 billion in FY22 as compared to Rs. 139 billion reported in FY21, illustrating a growth of 72 percent or Rs. 100 billion year-on-year.
The financing from Islamic banking branches of conventional banks increased significantly in the fiscal year 2022, amounting to Rs. 353 billion. This is91 percent higher than the Rs. 184 billion reported in the previous fiscal year, amounting to an increase of Rs. 169 billion.
Major sectors that received banks’ credit are textile, telecommunications, cement, leather, automobile, construction, and agriculture.