The borrowing of the private sector 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.
According to the State Bank of Pakistan (SBP), banks’ credit to the private sector witnessed a record 88 percent year-on-year growth in FY22 as compared to FY21 in which the borrowing stood at Rs. 766 billion.
The uptake of credit by the private sector was mainly the appetite triggered by the economic recovery in the country, particularly in the large-scale industries and export-oriented businesses, which enhanced their investments in capital and running operations.
The 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 surged to Rs. 239 billion in FY22 as compared to Rs. 139 billion reported in FY21, showing an increase of 72 percent or Rs. 100 billion year-on-year.
The financing from Islamic banking branches of conventional banks also increased to Rs. 353 billion in FY22 as compared to Rs. 184 billion reported in FY21, up by 91 percent or Rs. 169 billion, according to the data reported by the SBP.
Major sectors that received banks’ credit are textile, telecommunications, cement, leather, automobile, construction, and agriculture.
