Bank advances to private sector plunge

Borrowing by the private sector has gone down by 86.3 per cent to Rs57.4 billion during the first half of the current fiscal year, from Rs419bn during the same period of last year. Only the Islamic banks were able to extend loans to the private sector during the first half of the current fiscal year, reflecting an extremely poor performance by both the private sector and lenders. Since the economy is under stress of low growth, trade and industry are not borrowing from banks, leaving the space open for banks to make an optimum investment in government’s papers and reap risk-free profits. The latest data released by the State Bank reveals that even though more than six months of the current fiscal have passed, major conventional banks have been unable to extend loans to the private sector. The balance sheet by major banks shows a net debt retirement of Rs34.7bn against a net lending of Rs452.5bn in the same period of last fiscal year.