CPS flows expand 82% during FY2016


ISLAMABAD, Jun 2 (APP): The flows of Credit to Private Sector (CPS) have seen expansion of 82 percent during the fiscal year 2016 compared to the contraction of 41.5 percent during same period last year.
According to Economic Survey of Pakistan, launched here Thursday by Finance Minister, Muhammad Ishaq Dar, the flows of CPS stood at Rs.311.7 billion from July-6th May (FY2016) against Rs.171.2 billion in the same period of last year.
The outgoing fiscal year FY 2016 has seen more expansion in credit to private sector due to expansionary monetary policy stance by SBP.
SBP cut its policy rate significantly to 5.75 percent in May, 2016 which is the lowest in 44 year.
Broad Money (M2) increased to Rs.781.8 billion (6.93 percent) during the period against the expansion of Rs.690.0 (6.92 percent) last year.
Within Broad Money, NFA of the banking system during observed an expansion of Rs.105.2 billion against the net expansion of Rs.222.3 billion during the corresponding period of FY2015.
The NDA of the banking system showed an increase of Rs.676.6 billion against an increase of Rs.467.6 billion.
Higher increase was on the back of significant rise in Private Sector Credit (PSC). A welcome development is the gradual rise in net credit disbursement for fixed investment, it said adding it appeared that many firms are expanding their operations by availing fixed investment loan.
Government sector borrowing (net) reached to Rs.567.5 billion during Jul-06th May, FY 2016 as compared to an increase of Rs.539.4 billion in the same period of FY 2015.
Net budgetary borrowing from banking system remained at Rs.643.0 billion compared to Rs.560.8 billion in the same period last year.
Government borrowing from scheduled banks remained lower and stood at Rs.702.9 billion against Rs.1,093.2 billion in comparable period of last year. While, government retired Rs.59.8 billion to the State Bank of Pakistan during the period Jul-06 May, FY 2016 against the retirement of Rs.532.3 billion in the same period of FY 2015.
The overall performance of the banking sector during the last couple of years has been quite impressive and the momentum continued in the FY2016 with asset base reaching to Rs.14.3 trillion by end March, 2016 (Rs.12.1 trillion as of end March, 2015).
Similarly, asset quality has also improved and gross NPLs to loans ratio reduced from 12.3 percent in CY14 to 11.4 percent in CY15.
Whereas, Capital Adequacy Ratio (CAR) increased to 16.3 percent by end March, 2016 that is much strong and higher than the minimum required level of 10.25 percent.