January 14, 2022 (MLN): Private sector credit offtake during Jul-Dec FY22 reached Rs1,013 billion against Rs344.17 billion in the same period last year, up by 2.9x YoY, SBP data showed.
The growth in private sector borrowing shows increasing private sector confidence and investment and a strong growth momentum in the economy, PM said in his tweet few days ago.
SBP in its Quarterly Compendium said that the healthy growth in credit to the private sector is quite encouraging, as it will prop up the low credit incidence in Pakistan as measured by the domestic private credit to GDP ratio.
Moreover, SBP’s refinance schemes announced in the wake of COVID-19, particularly the Temporary Economic Refinance Facility (TERF), has been supporting the private sector credit growth in the last few quarters.
Going by the SBP data, the private sector borrowed Rs766.2bn in the previous fiscal year while in FY20, the total amount was Rs196.36bn.
Conventional banks played a major role in increasing credit disbursements from their own sources as credit off-take from conventional banking branches jumped by 3.5x to Rs706.37bn during 1HFY22 against Rs199.38bn in the corresponding period year.
Islamic banks disbursed Rs124bn worth of credit to the private sector, against Rs82.59bn in the same period last year, showing an increase of 50% YoY.
Moreover, Islamic banking branches of conventional banks disbursed Rs183.48bn to the private sector during Jul-Dec FY22, compared to Rs62.19bn in the same period of the previous fiscal year, Central Bank data said.
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