ISLAMABAD: The credit to private sector surged by Rs 352.3 billion during the first half of the current fiscal year (2015-16) compared to Rs 222.3 billion during the corresponding period of last year, State Bank of Pakistan (SBP) reported on Tuesday.
According to SBP, Second Quarterly report for Financial Year 2016, a significant portion of this credit was availed by private sector businesses.
A high credit off-take was recorded in December 2015, which was sufficient to compensate for the lower cumulative flow during earlier months of the year.
According to details, net disbursement to agriculture sector expanded Rs 17.7 billion in current year, compared to Rs 18.3 in same period of last year.
The main beneficiary was livestock which availed half i.e. Rs 8.7 billion of the total credit to the sector.
Credit to manufacturing sector showed a higher growth of 9.6 percent during the period under review as compared to 7 percent last year.
The main beneficiaries were textile and chemical sectors, the report added.
Loans to textile witnessed a net increase of Rs 82.6 billion in first half of the current year as compared to Rs 57.7 billion during the same period of last year.
The chemical sector showed the biggest improvement within manufacturing by availing Rs 40.9 billion credit in first half as against to Rs2.2 in the same period of last year.
Giving details about the other private sector business, the report says, development in construction related sectors hinted a pickup in economic activity, probably due to initiation of China Pakistan Economic Corridor related projects.
The total credit availed by this group was Rs 49.8 billion, the highest since financial year 2007.
The report said, it was worth noting that the monthly flow in December 2015, being twice as high as the average monthly flow in December 2015, may not just be a seasonal phenomenon.
The demand for private sector credit was high due to lower cost of credit and better market conditions, the report added.
Similarly, the inclination and ability of banks to lend to the private sector also improved as suggested by frequency and volume of SBP Open Market Operation (OMO) injections; high deposit growth; comparatively lower government budgetary borrowing and relatively high return on private sector lending.
Improvement in credit to private sector over the previous year primarily came from the manufacturing sector, followed by commerce and trade, construction, and electricity.
With the exception of ship breaking, which received Rs 13.4 billion lower cumulative flows in FY16 over FY15, the improvement can be considered broad-based.
While credit for working capital and fixed investment categories showed higher growth, credit for trade financing was lower in current fiscal year compared to previous year.
Comments
Comments are closed.