KARACHI, June 27: The government has raised Rs96 billion from scheduled banks through treasury bills auction held on Wednesday.

The cash-starved government has been borrowing heavily from banks to meet its fiscal deficit that could be around 6.5 per cent of the GDP in the current fiscal year, ending on June 30.

The banks have offered a total of Rs130.9 billion to buy treasury bills, but bills were sold for Rs96 billion.

Further details showed that banks invested heavily in three months treasury bills that was around Rs66 billion.

The benchmark 6-month treasury bills were sold for Rs10 billion while Rs19.3 billion were invested for 12 months.

The cut-off yield for 3-month, 6-month and 12-month were 11.92 per cent, 11.94 per cent and 11.95 per cent, respectively.

The yields are comfortably good for the banking sector not taking risk to make advances for the private sector.

The banking spread has been more than 7 per cent which means the banks keep much more than what they pay to their depositors.

Despite several attempts taken by the State Bank to improve this situation for the benefits of the depositors, the overall impact is negative for the depositors.

In the presence of 11.5 to 12 per cent inflation, the depositors have been receiving negative return on their deposits while the banks remained in profits.