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HomeGeneralThe private sector borrows more than Rs1 trillion per half-year

The private sector borrows more than Rs1 trillion per half-year

KARACHI: The State Bank of Pakistan (SBP) revealed on Wednesday that private sector bank borrowing reached an all-time high of Rs1 trillion in the first half of fiscal year 2021-22. The private sector borrowed Rs1.013 trillion in the current fiscal year, compared to Rs344 billion in the previous fiscal year, according to the central bank.

According to bankers, if the private sector’s credit off-take continues at its current rate, it will undoubtedly establish a new record.

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They went on to say that the rate of borrowing might result in an unexpectedly strong rate of growth for the country’s economy.

The half-year borrowing of private sector crossed the borrowing figure recorded during the of entire fiscal year 2020-21.

The private sector borrowed Rs766bn in the previous fiscal year while the total amount in was Rs196bn in the fiscal year 2019-20.

Conventional banks played a key role as credit off-take shot up to Rs706bn during the first six months of the current fiscal year against Rs199bn in the corresponding period of the last fiscal year, the central bank said.

Islamic banks also extended Rs124bn loans to the private sector during this period compared to Rs82bn in the same period of the last fiscal year.

Islamic banking branches of conventional banks provided Rs183bn to the private sector in the first half of the current fiscal year compared to Rs62bn in the same period of the previous fiscal year.

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The unexpected borrowing by the private sector is unusual since the interest rate has gone up during the last quarter of calendar year to 9.75 per cent.

The interest rate has been increased to protect the economy from increasing inflation that creates unwanted heating for the economy.

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