The federal government Wednesday borrowed over Rs 139 billion from the scheduled banks to cater its ever increasing budgetary needs. The fresh borrowing was made through the State Bank of Pakistan which auctioned the market treasury bills (MTBs) worth over Rs 139.182 billion.
The government papers sold out to the risk-averse banks are of 03-, 06- and 12-month maturity period against which the central bank, respectively, raised Rs 91.031 billion, Rs 45.319 billion and Rs 2.832 billion.
The cut-off yield for the T-bills was 11.8742, 11.9420 and 11.9396 percent. While the weighted average yield for the three maturity periods was set at 11.8670, 11.9279 and 11.9396 percent, respectively.
In line with their current risk-averse behavior the banks had submitted bids accumulating to Rs 192.582 billion but the federal finance ministry, through the State Bank, accepted bids of Rs 139.182 billion only.
The banks had bid to extend a loan of Rs 126.831 against the securities maturing in three months, Rs 57.319 billion for six months and Rs 8.432 billion for 12 months.
The banks’ inclination towards short-term investment shows their risk-averse behavior which the official and unofficial analysts believe would adversely impact the economic growth prospects in the country.
While the economic observers warn against the government’s increased reliance on bank borrowings, the cash-strapped government has targeted to sell the government papers amounting to over Rs 1 trillion during the ongoing last quarter, April-June, of FY12.
