The government has taken a loan of Rs 24.58 trillion from commercial banks overall.
Karachi: In November, the rate of lending to the government by commercial banks reached a record high of 92%, after which there is no interest in obtaining loans from banks for private institutions. According to the statistics of State Bank, during November, commercial banks provided the government with loans worth Rs 24.58 trillion from their existing reserves of 26.79 trillion, these loans were given in the form of debt securities such as T-bills and Pakistan Investment Bonds.
During the past year, bank capital in debt securities increased by 33% from Rs 18.48 trillion to Rs 24.58 trillion, similarly, banks’ investment to deposit ratio (IDR) has increased by 10.44 percentage points from 81.3% to 91.7%.
Speaking to The Express Tribune, Research Head Aarif Habib Limited, Tahir Abbas said that high-interest rates have deterred investors from obtaining loans from banks for business, thus all the onus of the banks is towards the government, which is having to borrow the most due to the payment of salaries and pensions to employees.
They said that the facilities for obtaining loans from investors will occur next year, because State Bank has indicated that the interest rate will be reduced to 15% by December 2024, according to State Bank, during the past year, there has been an 18% increase in bank reserves, However, this amount could not have had any positive effect on economic activities due to the exposure of the loans.
Tahir Abbas further said that due to high-interest rates, people have preferred to keep their money in banks, leading to a decrease in circulation of cash, which is helpful in making the economy documentable, he said that the largest increase in bank reserves is due to foreign remittance.
He said that this trend will continue in the short term, and expressed hope that increasing external financing will reduce the government’s dependence on domestic loans.