KARACHI: Bank financing for businesses in the private sector has reached 44 percent of deposits by October 25, 2024, up from 39 percent at the end of September.
The government has approached the Supreme Court to overturn the Islamabad High Court’s (IHC) injunction against imposing an additional tax of 15 percent on banks that do not meet 50 percent advance-to-deposit ratio (ADR) by December 31, 2024.
According to SBP data, private sector advances rose 11% to Rs 13.4 trillion, while deposits fell 3% to Rs 30.5 trillion, leading to an automatic improvement in ADR. The IHC temporarily restrained the government from collecting the tax, which will be heard on December 3.
The government expects Rs 100-197 billion in tax revenue from the initiative, which is essential to meet IMF targets.
Banks are offering credit at Kibor minus 12%, effectively 3-4%, and are lending to sister companies and trusted clients to meet the December 31 ADR target, which applies only for one day. It takes Borrowers are expected to repay the funds as early as 2025.
The Federal Board of Revenue (FBR) plans to calculate the ADR average for the entire year from 2025 onwards to ensure continuous financing to the private sector.
Separately, the rupee fell to 278.04/$ in the interbank market, a two-month low, on increased dollar demand for imports. In the open market, it touched Rs278.99/$. Positive news such as $500 million from ADB and $3 billion in investments from Azerbaijan failed to stem the decline.
