Banks advance record Rs1.9tr to private sector

The private sector borrowed a record Rs1.9 trillion from banks during the first half of FY25, registering a surge of 265 per cent from the same period last fiscal year. The latest data released by the State Bank of Pakistan (SBP) on Monday indicated that banks have been extending advances to the private sector despite existing risks posed by sluggish economic growth and political uncertainty. In the first quarter of the current fiscal year, the bank advances were much lower, but the steep fall in the interest rate encouraged the private sector to go for the relatively cheaper money. Since June 2024, the State Bank has slashed its policy rate by 900 basis points to 13pc from an unprecedented level of 22pc, which had stifled the growth. The sharp deceleration of Consumer Price Index-based inflation, which hit almost a seven-year low at 4.1pc in Dec 2024, was the key reason that compelled the country’s monetary policy managers to slash the rate gradually.