Banks fail to increase lending as ADR remains at 39.3pc

The banks’ advance-to-dep­osit ratio (ADR) remained at 39.3 per cent last month — much below the red line of 50pc, which attracts a 15pc incremental tax. The latest data shows that the ADR increased by 90 basis points month-on-month, but fell by 579bps year-on-year to 39.3pc. The government imposed a 15pc tax in the budget for the current fiscal year on all banks whose ADR was below 50pc. The purpose of the move was to encou-rage banks to incr­ease lending to the private sector. The private sector has been starved off bank loans for the last two years due to a high interest rate and political uncertainty. The banks made record profits in CY2023, at times going up to 100pc. They made most of the money by lending to the government.