Bank lending to govt surges past Rs44tr

Bank lending to the government has exceeded Rs44 trillion, while lending to the private sector accounts for just 21 per cent of total advances, highlighting the growing imbalance in the country’s credit landscape. According to the latest data released by the State Bank of Pakistan (SBP), government borrowing from banks surged by Rs8.5tr in FY24 alone. In stark contrast, private sector lending fell to a mere Rs46bn in FY23, rose modestly to Rs513bn in FY24, and stands at around Rs742bn so far in FY25. As of May, the government’s holdings of market securities stood at Rs44.889tr, of which 78.9pc (Rs35.440tr) were held by scheduled banks and 21.1pc by non-bank entities. Notably, the corporate sector is increasingly parking its liquidity in government securities, a trend that underscores the diminishing appetite for or opportunity in real-sector investment. Corporate holdings in government papers have now reached Rs9.5tr