NPLs continue to grow since the past few years and now they have an unprecedented level of Rs594.5 billion which should be a source of distress for economic managers trying to bring economy back on track, it said.

Growing NPLs are a result of unheard level of government borrowings which has choked the productive sector of the country, said Dr. Murtaza Mughal, President PEW. He said that banks would feel comfortable to lend to government than financing the private sector whose repayment capacity is on a constant decline. It is also bad news for our agricultural sector which is yet to recover from the pain inflicted by floods, he added.

Slow moving economy, high interest rates, energy shortages, law and order, dwindling rupee, double- digit inflation, weak recoveries, tradition of writing-off loans advanced to influential, and political uncertainty are some of the factors contributing to the NPLs, he said. Dr. Murtaza Mughal said that declining foreign investment, slumping domestic savings, political interference and inefficiency of some financial institutions are also to be blamed.

He said that authorities should take these developments seriously. This will also hurt growth and add to unemployment, he warned. Prevailing difficult operating environment for banks and difficulties in enhancing revenues should be taken seriously by all stakeholders, he advised. Dr. Mughal said that time has come for the government to limit borrowing and take practical steps to improve our poorly regulated monetary system which is not helping anyone but ruling elite.