KARACHI: Private sector borrowing from banks increased by 34 per cent during the first nine months of this fiscal year, reported the State Bank of Pakistan on Tuesday.

The SBP data showed that the private sector borrowed Rs444.5 billion during July-March 2020-21 against Rs332bn in the corresponding period last year.

Economic activities this year are better than the pre-Covid period of FY20 and the private sector is likely to surpass borrowing figure of FY19 (Rs693.5bn) by end of this fiscal year. During FY20, the sector’s could borrow Rs196bn mainly due to emergence of Covid-19 in the fourth quarter.

The International Monetary Fund has recently said the economic growth rate for FY21 will be around 1.5 per cent while the World Bank says the GDP growth would be 1.3 per cent.

However, State Bank Governor Dr Reza Baqir again said on Monday that country would achieve 3pc GDP growth in FY21.

Exporters have been reporting robust activities as they got orders much higher than several previous years.

Conventional banks reported highest growth in their advances to the private sector as they increased by 51pc during July-March FY21. During this period the conventional banks’ advances to private sector rose to Rs220bn against Rs145.6bn in the same period FY20.

Islamic banks, which have been increasing their size in the banking industry, showed growth of 34pc in advances to the private sector. Recently, the State Bank announced third five-year plan for the Islamic banking industry to expand its assets and deposits share to 30pc in overall financial sector.

Compared to Islamic banks, the Islamic windows of conventional banks proved more effective as their advances to the private sector rose 12pc to Rs133.4bn in 9MFY21 against Rs119.2bn.

Published in Dawn, April 14th, 2021