KARACHI, April 23: Holdings of government securities by banks and non-banks crossed Rs4.7 trillion at the end of March this year, reflecting a massive government borrowing.

The previous government did not spare any avenue to raise money during its five-year term.

The State Bank reported on Tuesday that the stock of government securities at the end of March rose to Rs4.721tr, mostly dominated by the market treasury bills.

Banks purchased Rs2.675tr t-bills till the end of last month while non-banks and corporate entities also bought t-bills worth Rs468bn.

The grand total of t-bills rose to Rs3.143tr.

Pakistan Investment Bonds (PIBs) also witnessed a major jump and the figure reached Rs1tr in the same period.

Details showed that scheduled banks bought PIBs worth Rs615bn out of total Rs1.118tr.

Non-banks, insurance companies and other corporates collectively bought PIBs of Rs503bn.

Islamic Banks have also been following the same path as of conventional banks as they have been investing heavily in government papers despite their small share in overall banking industry.

The State Bank reported that Islamic Bonds (Ijara Sukuk) worth Rs414 billion were bought by scheduled banks.

Total holdings of Islamic bonds by banks and non-banks stood at Rs459bn.

Out of total holdings of government papers, scheduled banks held securities worth Rs3.705tr, giving a pathetic picture of banking in Pakistan.

Banks did not change their strategy during the last five years, and kept on investing in government papers instead of finding new options for financing or investment.

The huge holding of government papers shows that banks money is stuck up with non-productive spending of the government.

During the last 18 months, the State Bank slashed the interest rate by 4.5pc which ultimately cut return on government papers, thus reducing the banks’ profits. However, banks now find it hard to use their money for lending to private sector.

It not only saved banks from high rate of non-performing loans, but also hurt the banking.