Increased confidence results in enhanced bank loans

Staff Reporter

Islamabad

Business community is getting more and more loans from the banks, which reflects their increased confidence that also indicates economic development, a business leader said Saturday. The ratio of defaults has come down which has encouraged banks to lend more which is good omen for the economy, said Atif Ikram Sheikh, former president ICCI.
He said that average GDP growth remained 3.7 percent during 2011 to 2013 while it jumped to 4.3 percent during 2014 to 2016 while it may cross five percent in the ongoing year. Atif Ikram Sheikh said that SMEs took more loans in 2016 as compared to 2015 in which auto sector, leather industry and food industry took the lead. The default ration of the SMEs fell from 26.1 percent to 20.3 percent, he added.
The business leader said that corporate loans against fixed assets jumped from 19 to 21 percent and many companies took the opportunity of low interest rates to clear their balance sheets. The tendency of returning loans has reduced the ratio of infected loans of a major bank from 12.3 to 10.6 percent which has encouraged bankers to lend more.
The sector of large-scale manufacturing acquired loans worth Rs 119 billion in 2015 and the same sector took loans of Rs 225 billion in 2016. The consumer finance has also jumped from Rs 29 billion to Rs 70 billion but the agricultural loans have not improved which should be noticed, he said.