KARACHI, Oct 4: Banks and development financial institutions are aggressively involved in badla financing — thanks to their inability to lay hands upon safer investment. According to the State Bank statistics the total exposure of banks and DFIs in badla financing or carry over transactions of shares rose to Rs10.2 billion at the end of the first week of September from Rs4.3 billion at end-June.

The statistics put on SBP website show that this was part of the total exposure of Rs44 billion that the banks reported in shares and badla financing. Their investment in quoted shares stood at Rs33.8 billion at the end of first week of September up from Rs30 billion at end-June. At the end of the second week of last month the total exposure of banks and DFIs in badla financing and shares inch up to Rs44.192 billion from Rs44.056 billion at the end of first week and from Rs34.37 billion at end-June.

At the end of second week of September the investment in quoted shares by banks and DFIs stood at Rs34.13 billion and their investment in badla financing at Rs10.06 billion.

Senior bankers say banks and DFIs have been taking increased interest in the bullish stock market primarily because they are awash with excess liquidity and their exposure in safer modes of investment has already reached a stagnant point. “How long can we keep investing in T-bills and bonds,” said head of finance division of a private bank. He said even the private sector credit demand has not been as high these days as in the comparable period of last fiscal year. “We therefore have to venture into riskier areas like stocks and badla financing.”

At the end of second week of September the Karachi Stock Exchange 100-share index rose to 4,606 points from 3,400 at the end of June.