The private sector borrowing from the banking sector surged by 285 percent to Rs. 807 billion during the first seven months of the current fiscal mainly because of less government borrowing from the local market.
According to an official document, the private sector borrowing from the banking sector jumped to Rs. 807 billion from Rs. 283 billion during the first seven months of the current fiscal year as compared to the same period of the last fiscal year. The private sector borrowing grew despite an increase in the policy rate by the central bank.
The total stock of the private sector credit from the banking sector climbed to Rs. 5.685 trillion up to June 30, 2021.
The document shows that the private sector availed credit of Rs. 539 billion from conventional banking branches during the first seven months of the current fiscal year compared to Rs. 151 billion during the same period of the last fiscal year.
Islamic Banks of the country also increased their penetration by almost two times in the private sector. The figures show that the private sector obtained Rs. 102 billion credit from Islamic Banks during the period. The private sector had availed Rs. 57 billion during the first seven months of the last fiscal year from Islamic Banks. The stock of the total credit of Islamic Banks to the private sector reached Rs. 1030 billion up to June 30, 2021.
The Islamic Banking branches of conventional banks also distributed Rs. 165 billion during the first seven months of the current fiscal year as compared to Rs. 74 billion the same period of the last fiscal year. The total stock of the loan of the private sector from this source swelled to Rs. 913 billion up to June 2021.
The document shows that the loss-making Public Sector Enterprises (PSEs) also availed Rs. 39 billion loans from the banking sector during the last seven months. The PSEs had retired credit of Rs. 497 million to the banking sector during the same period of the last fiscal year. The total credit stock of the PSEs was recorded at Rs. 1436 billion up to June 30, 2021.
On the other hand, the government borrowing from the banking sector has been on the decline for a couple of years. According to the document, the net government borrowing from the banking sector was reduced to Rs. 154 billion from Rs. 171 billion during the first seven months of the current fiscal year as compared to the same period of the last fiscal year.
The total debt stock of the government loan was recorded to Rs. 16.265 trillion up to June 30, 2021. The government had availed credit of Rs. 1718 billion during the fiscal year 2020-21 and Rs. 2211 billion during the fiscal year 2019-20. The document indicates a big shift in the government policy of borrowing from the internal sector to the external sector for bridging its financial needs.
According to the Finance Ministry, the government has obtained Rs. 1025 billion from external resources to meet the budgetary requirements. The government only took Rs. 364 billion from the internal side including Rs. 269 billion from the banking side and Rs. 77 billion from the non-banking sector.
