Banks extended Rs. 873 billion in net financing to Pakistan’s private sector during the current fiscal year through July 12, marking a 29 percent increase from Rs. 676 billion disbursed during the same period last year, according to the latest data released by the State Bank of Pakistan (SBP).
A breakdown of the data shows a significant shift toward Islamic banking. Full-fledged Islamic banks extended Rs. 160 billion in financing during the period, down 54 percent from Rs. 347 billion a year earlier.
Also, the Islamic banking divisions of conventional banks sharply increased lending to Rs. 729 billion, compared with just Rs. 140 billion in the corresponding period last year.
Overall, the strong increase in private sector credit comes despite the SBP’s policy rate standing at 11.5 percent, with commercial lending rates typically remaining above the benchmark.
Meanwhile, conventional banking operations recorded a net retirement of Rs. 17.6 billion in loans, reversing the Rs. 187 billion in net lending recorded during the same period of the previous fiscal year.
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