Bank lending to private sector plunges

Banks’ net lending to the private sector plunged 90 per cent during the first 10 months of the current fiscal year suggesting a sharp economic slowdown. In the backdrop of unprecedented inflation and record-high interest rates, banks are not ready to take risks by extending loans to the private sector struggling to run businesses in highly unfavourable situations plagued with unending political and economic uncertainties. In the given situation, banks are happily lending money to the cash-strapped PDM government to earn risk-free abnormally high-profit rates close to 22pc. The latest data provided by the State Bank of Pakistan (SBP) showed that net bank advances to the private sector tumbled to just Rs129.6bn during July 1-May 5 FY23 against Rs1,296bn in the same period of last year.