PM for simplifying banking system
Prime Minister Shehbaz Sharif on Monday stressed for simplifying the process of the banking system and making it easier in order to facilitate consumers.
The prime minister stated this in a meeting with Finance Minister Miftah Ismail, which was also attended by Habib Bank President Muhammad Aurangzeb, Chief Secretary Punjab, and other senior officials. Prime Minister directed to formulate a comprehensive strategy to effectively resolve the economic problems of the people.
He also ordered special arrangements to ensure the supply of food items to the general public at cheaper rates.
Banks extended record loans to the private sector in the first 10 months of the current fiscal year as the figure is significantly higher than the combined disbursements in the last two fiscal years.
The latest data issued by the State Bank of Pakistan (SBP) showed that the private sector borrowed Rs1,235.5 billion till April 22 in the current fiscal year against Rs415bn in the same period of last year. It was the highest amount borrowed by the private sector in last five years.
The bank advances to the private sector in JulyApril 2021-22 were much higher than the total loans extended in the last two years. The private sector borrowed Rs766.2bn in FY21 and Rs196bn in FY20.
The Covid pandemic badly hit the economy in FY20 that slowed down the private sector borrowings hitting the lowest in the five years due to lockdowns. The combined bank loans to the private sector in FY20 and FY21 was Rs962.5bn.
The situation has totally changed as the higher borrowing by the private sector reflects booming economic activities that may help the government achieve the GDP growth target and the SBP had recently forecast economic expansion of between 4 to 5 per cent this fiscal year.
Also the growing external trade led by record imports coupled with a handsome double-digit increase in exports is an indication of accelerated economic activities. The largescale manufacturing grew by a record 8.2pc in February.
However, bankers and analysts said the cost of doing business has also gone up and may be one reason for higher borrowings by the private sector to meet their financial requirements. The inflation in April was 13.37 per cent reflecting the cost of production has also affected the businesses.
'Investment is picking up on the back of Temporary Economic
Refinance Facility (TERF) along with higher demand for working capital due to higher commodity prices," said head of research at Pak-Kuwait Development and Investment Company.
The government provided cheaper money through TERF to the trade and industry to avert the impacts of the pandemic that hit the entire world and slowed down the economic growth. Pakistan also suffered and still facing the super cycle of commodity prices in the international market.
This price increase resulted in massive import bill of $65.5bn in the first 10 months of this fiscal year against $44.7bn in 10MFY21.
Exports increased by 25.5pc to $26.2bn in JulyApril from $20.9bn in the same period last year. Some analysts believe that rising export proceeds are partially due to higher prices received by the Pakistani exporters.