Lending to private sector crosses Rs 290 billion

The private sector credit offtake from banks and other financial institutions crossed the Rs 290 billion level during eleven-and-a-half months of last fiscal year because tremendous growth heralded in textile, auto, engineering, cement and food groups.
According to data posted on the website of the State Bank of Pakistan, between July 1, 2003, and June 19, 2004, the credit offtake amounted to Rs 291 billion as compared with Rs 141 billion of the same period a year ago, almost doubling from the previous fiscal year because of low interest rates, growth in economy and boost in the exports during the last fiscal year.
The exports exceeded the government's target and at the end of last fiscal year the shipments had reached $12.3 billion where textiles share was around 65 percent.
The textile exports during the period rose 12 percent to $8.089 billion as compared with $7.224 billion. Growth in textile exports was evident from the raw material imported during the period including the textile machinery, which also registered an increase of 10 percent.
According to an analyst the credit offtake was an all-time high and this probably contributed to major positive developments in the economy, such as higher utilisation of capacity in the manufacturing sector, continued BMR in textile sector, the development of the consumer credit market, increased focus of private commercial banks on the agri-credit market, as well as the increased participation of the private sector in the domestic commodity market.
Automobiles and electronics remained the fastest growing sub-sectors. Strong sale of passenger vehicles--cars and motorcycles--on the back of increasing auto loans by commercial banks and higher remittances had compelled assemblers to enhance capacity utilisation.
This took place despite the fact that there was a slight slowdown in booking of cars in the months of November and February in anticipation of reduction in import duties and allowing the import of used/reconditioned cars.
The sale of tractors also received a significant boost from the entry of commercial banks in financing the purchase of tractors.
Higher sale and production of LCVs and trucks also reflected improvements in the broader economy, the third quarterly of the State Bank of Pakistan, released last month said.
Cheaper interest rates encouraged textile, auto and cement companies to borrow more to increase their production and meet demand, an analyst said.
The central bank said that production at the country's factories rose 13.7 percent in nine months to March 31, compared with 7.9 percent in the year-earlier period.