The funds-starved federal government Wednesday borrowed over Rs180.359 billion more from the commercial banks to finance its ever-increasing budgetary needs.
The government’s budgetary borrowings from the banking system have ballooned to Rs729.382 billion during July-June 4 FY11 against Rs416.666 billion of corresponding period last year, according to State Bank of Pakistan (SBP) data. The fresh billions were raised by the State Bank through auctioning the Government of Pakistan Market Treasury Bills of 3, 6 and 12-month maturity period.
For quite sometime commercial banks have been under fire for their ‘risk-averse’ approach of avoiding extending advances to the growth-oriented private sector and also prioritising risk-free and heavily-weighted government papers like MTBs and PIBs to accrue handsome profits on account of mark up on completion of the given maturity period.
Proving this impression true, commercial banks came up with extensive offers of over Rs232.614 billion in response to the regulator’s call for investment in government securities.
The money offered against the 3, 6, and 12-month MTBs accounted, respectively, for Rs46.765, Rs114.591 and Rs71.257 billion. The Ministry of Finance, however, accepted bids having a face value of Rs180.359 billion with a respective maturity-wise breakup of Rs28.435, Rs82.916 and Rs69.007 billion.
