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Credit to private sector recorded a YoY growth of 6.0 percent during H1-FY15 compared with 9.6 percent during the same period last year. According to State Bank of Pakistan''''s second quarterly report a sharp fall in commodity prices has also impacted bank credit in H1-FY15.4 So far, net credit to private sector has expanded by Rs 222.3 billion in H1-FY15, compared with Rs 321.3 billion during the same period last year.
Both demand and supply factors contributed to this slowdown. On the supply side, a rise in government borrowing from commercial banks and subdued growth in banks deposit reduced available funds for the private sector during the period under review. On the demand side, softening commodity prices especially of cotton, rice and sugarcane, persistent energy shortages, and healthy profitability, curtailed the demand for bank credit.
Within private businesses, the deceleration in credit offtake can be traced to lower demand from the manufacturing sector, as the agriculture sector borrowing remained at the level seen in H1-FY14. Specifically, loans to manufacturing sector expanded by Rs 114.6 billion during H1-FY15, compared with an increase of Rs 165.0 billion during the same period last year. This slowdown was largely coming from food, textile and energy sectors.

Copyright Business Recorder, 2015

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