Private sector availed Rs 773 bill credit during the first half of the current fiscal year
Four main contributors for this increase in private sector loam, Dr Najeeb
Government bank borrowing also decreased to Rs55 billion from Rs 450 billion
Loss making Public Sector Enterprises retired Rs29 billion during the half

ISLAMABAD (Eshfak Mughal):- The Credit to Private Sector from local banking sector has been increased more than triple time during the first half of the current fiscal year as against the same period of the last fiscal year.
Over from triple time growth in credit to the private sector signs of healthy activities in the country’s economy which must be reflected in the GDP growth during the current fiscal year.
According to an official document, the private sector took Rs773 billion from the banking sector during 1st July to 8th January 2021, which is almost three and half time high from the same period of the last fiscal year. The private sector had availed Rs only Rs215 billion.
The total stock of the credit to private sector has been mounted to Rs 7.629 trillion up to June 2021.
The private sector availed Rs507 billion from conventional banking branches, Rs 92 billion from Islamic Banking and Rs193 billion from Islamic Banking Branches of the Conventional Banks. The conventional banking branches had disbursed Rs98 billion, Islamic Banking Branches Rs62 and Islamic Banking Branches of the Conventional Banks gave Rs55 billion during the first half of the last fiscal year.
Usually, the Industries and traders are main players of the private sector which took credit from Banks.
Economic experts believe that the govt incentives schemes, expansion in textile sector and inflation are main contributors of this increase.
Dr, Najeed Khaqan, who had worked in Finance Ministry, believes that there are four main reasons behind this growth. He said that government scheme of 3 percent interest on loan was main pillar of this growth. Beside that high inflation rate and expansion of textile sector also contributed for increasing in private sector loan, Khaqan further said. Increase in demand of productions of private sector also a factor for increasing of the private loan.
The loss making public enterprises didn’t avail new credit from banking sector during the first half of the current fiscal year. The report shows that credit to Public Sectors Enterprises (PSE) squeezed as they retired Rs.29.5 billion net amount during the first half of the current fiscal year.
The document also shows that the net government borrowing from banking sector also decreased drastically during the first half of the current fiscal year. The Net government borrowing from banking sector decreased to Rs31 billion which was Rs 273 billion during the same period of the last fiscal year.
The document shows that Government has shifted dependence from banking sector to external sector for bridging the budget deficit. This change is mainly attributed to the IMF pressure as it is not in favour of direct government borrowing from the State Bank. The IMF believes that the direct government borrowing is inflationary.
On cash basis, The Government took only Rs55 billion from the internal banking sector which is Rs495 billion less than the amount from the same period of the last fiscal year. It had availed Rs450 billion from the local banking sector. The government not only stop new borrowing from the State Bank but also retired Rs79 billion from total stock of Rs5.274 trillion on end of June 2021 due to the IMF condition. However, the government avail Rs 134 billion from scheduled banks for budgetary support during the first half of the current fiscal year.
According to the fiscal operation report of the first quarter, the government had arranged Rs438,5 billion from local and external resources. The govt had availed Rs466 billion from external side for the bridging the gap of government’s income and expenditure. It also retired net Rs27 billion to the domestic sector.

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