KARACHI, Sept 15: The State Bank reported a decline of 28 basis points in the advance to deposit (ADR) ratio during the first eight months of this calendar year mainly due to higher government borrowing from the banking sector as banks’ investment in government papers rose 14 per cent.

The same ratio was significantly down particularly in August as the ADR was 59 per cent.

Just a few years bank, the ADR was more than 68 per cent but it started declining with the rise in investment to deposit ratio due to the government’s massive borrowing from the banking sector as it destroyed the balance between advances to investment.

During the last two months, the government has borrowed about Rs187 billion from the commercial banks leaving little option for banks to loan out to the private sector, making its growth stagnant.

The State Bank reported that during July and August, instead of borrowing the private sector paid back to banks as the balance sheet showed a negative borrowing of Rs23 billion.

The State Bank has been persuading the banks to make a strategy for higher advances to the private sector but the government seems determined to borrow largely from banks giving them easy income.

Banks witnessed a seven per cent increase in its deposits for eight months ended Aug 31, mainly due to massive inflows of remittances sent by the overseas Pakistanis.

However, despite the growth in deposits the banking industry has had tight liquidity and the State Bank has had to inject large sums of liquidity to keep them liquid and enable them to invest more in the government papers.

More From This Section

Ecnec okays Rs62bn projects

The Executive Committee of the National Economic Council has approved Rs62 billion worth of development projects.

Cabinet approves LNG import

ISLAMABAD: The much-awaited import of liquefied natural gas (LNG) as an additional source of energy was finally...

Cotton output rises to 13.39m bales

Figures compiled by CGA, Aptma and KCA during outgoing fortnight show around 4,953 cotton bales reached ginning units.

Dar’s statement helps dollar gain 1pc

Dar’s statement that the dollar will be kept around Rs98 to support the export industry created panic-like situation.


Comments are closed.
Explore: Indian elections 2014
Explore: Indian elections 2014
How much do you know about Indian Elections?
How much do you know about Indian Elections?
Cartoons
E-PAPER
Front Page