Banks Recovered Rs. 86.703 Billion From Non-Performing Loans in 2019

Commercial banks managed to recover a handsome amount of Rs. 86.703 billion in 2019 against Non-Performing Loans (NPLs) from customers of different sectors.

According to the State Bank of Pakistan (SBP), the recovery of cash against NPLs by commercial banks stood at Rs. 38.331 billion in the period of January to June and Rs. 48.372 billion from July to December in 2019.

In 2018, the banking industry made a recovery of Rs. 79.394 billion, which meant that banks intensified their efforts to recover their money from the borrowers in the outgoing years in which the policy rates were comparatively low yet saw an upward trend from 6 percent to 10 percent.

Banks’ NPLs Increase by Rs. 71 Billion in 2019

The improvement in the recovery of loans has reduced the NPLs which surged to an alarming level in the mid of 2019.

Overall, the banking industry NPLs surged by a whopping Rs. 71.029 billion in 2019. It increased from Rs. 705 billion to Rs. 782 billion from January to June, reaching an all-time high. It reduced in the subsequent next half to reach Rs. 776 billion.

During the period, credit to the private sector also reduced to a record low level due to high-interest rates but the NPLs were consistently increased.

In 2018, the banking industry saw an increase of Rs. 78.385 billion under NPLs. It surged to Rs. 616 billion from Rs. 638 billion from January to June and then increased to Rs. 694 billion by the end of December 2018.

The prevailing high-interest rates and a slowdown in the industrial activities and economic slowdown piled up a colossal amount under Non-Performing Loans of the banking sector, however, bank management put strenuous efforts to recover their money despite the high-interest rates.

As the policy rates are likely to improve in the coming months and business activities might increase especially in the manufacturing and agriculture sector, the banking industry could see improvement in their NPLs with consistent recovery of unproductive loans.