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KARACHI: Private sector obtained a record Rs 1.3 trillion loans from the domestic banking sector during the first 10 months of this fiscal year (FY22).

According to Economic Survey 2021-22, issued by the Ministry of Finance Thursday, during the period - 1st July to 29th April, FY2022 - private sector credit witnessed a significant expansion of Rs 1,312.9 billion against Rs 454.4 billion during comparable period of last year, hence posting a significant growth of 189.0 percent or Rs 858 billion.

Factors contributed to this unusual expansion included continuation of accommodative policy environment, availability of concessionary financing schemes, mainly the Temporary Economic Refinance Facility (TERF) and significant growth in Large Scale Manufacturing (LSM) that enhances the financial requirements of the industries. In addition, increase in industrial activity and improved business confidence also largely contributed in the healthy growth of private sector credit.

Quarter-wise data revealed that the first quarter (July-Sep) of FY2022 witnessed net expansion of Rs 177.4 billion credit to businesses as compared usual seasonal loan retirement of Rs 101.4 billion in same period of last year.

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Policy stance has been changed from accommodative to contractionary during second quarter of FY2022, it increased by 275 bps during second quarter, but high Weighted Average Lending Rate (WALR) cost has not been transmitted on borrowing pattern. Therefore, it has increased significantly to Rs 682.8 billion during second quarter (Oct-Dec) of FY2022 against the expansion of Rs 320.9 billion during same quarter of last year (FY20).

Private Sector business loans increased to Rs 142.0 billion during third quarter (Jan-March) of FY2022 against expansion of Rs 60.5 billion during comparable period last year.

According to Economic Survey, sectors which posted higher private sector credit expansion included Manufacturing Rs 789.0 billion, of which textile sector obtained Rs 334.1 billion loans. Among manufacturing sector, food products borrowed Rs 148.7 billion including Rs 62.4 billion by the rice processing sector and Rs 98.6 billion by sugar manufacturers. Information and Communication sector observed expansion of Rs 66.8 billion, followed by wholesale and retail trade Rs 46.1 billon, Construction Rs 31.0 billion and transport and Storage availed Rs 14.0 billion worth loans during the first nine months (July-March) FY22.

Copyright Business Recorder, 2022

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