Pakistan Private Sector Turns Net Borrower: Rs87 Billion Taken From Banks, SBP Data Shows
Pakistan's private sector became a net borrower for the first time in FY27, taking Rs87 billion net from banks between 1 July and 23 October, SBP data reported by Dawn shows — a swing from Rs29 billion in debt retirement a year earlier, just as the policy rate hit 12%.
Pakistan’s private sector has become a net borrower from banks for the first time in the current fiscal year, with State Bank of Pakistan data showing Rs87 billion in net borrowing between 1 July and 23 October FY27 — a swing from the same period last year, when businesses were retiring debt instead. The turn comes even as borrowing has just become more expensive.
Highlights
- The swing: Private-sector net borrowing of Rs87 billion from 1 July to 23 October FY27, versus Rs29 billion in net debt retirement in the same period last fiscal year, per SBP data reported by Dawn.
- Who lent: Only the Islamic banking branches of conventional banks recorded net lending; conventional banks saw a meagre Rs320 million net retirement (vs Rs117 billion retired a year earlier) and Islamic banks a Rs63 billion net retirement (vs Rs25 billion).
- The backdrop: The State Bank raised its policy rate by 50 basis points to 12% last week, which Dawn notes further reduces the chances of borrowing.
- The pressure: The prime minister has again told the Finance Ministry to act against banks delaying loans to farmers, SMEs and Apna Ghar applicants.
- The turnaround: As recently as 9 October, the private sector had retired a net Rs91.8 billion — so the borrowing surge is concentrated in the most recent weeks of the data.
What the SBP data shows
Dawn reported on Tuesday that State Bank data released on Monday showed private-sector net borrowing of Rs87 billion during 1 July to 23 October FY27, compared with Rs29 billion in debt retirement in the same period last fiscal year Dawn reported on 3 November. Dawn described it as the first time in 2026-27 that the private sector has shifted from retiring debt to net borrowing, and linked the change to the government’s continuous effort to push banks to pump more liquidity into the private sector.
The breakdown shows how narrow the lending base still is. Only the Islamic branches of conventional banks extended net loans; conventional banks recorded a net debt retirement of just Rs320 million, against Rs117 billion retired in the same period last year, while Islamic banks recorded a net retirement of Rs63 billion, against Rs25 billion last year Dawn reported, citing the SBP data. The comparison with the position only two weeks earlier is striking: as Titans Infos’ earlier coverage of the credit data showed, the sector was still deep in repayment mode, and Dawn’s own 20 October report put net retirement at Rs91.8 billion for 1 July to 9 October, versus Rs31.7 billion a year earlier Dawn reported on 20 October. The move from Rs91.8 billion retired to Rs87 billion borrowed implies a very large swing in the fortnight to 23 October — the data does not say which sectors borrowed, and this article does not guess.
Borrowing turns positive just as money gets dearer
The timing is the hard part of the story. The State Bank last week increased the policy rate by 50 basis points to 12%, a move Dawn noted further reduces investors’ chances of borrowing, and bankers and analysts believe the rate may have to rise further because the four-month average inflation is still in double digits Dawn reported. The hike — covered by Titans Infos when the SBP raised the policy rate to 12% in October 2026 — was driven by Middle East conflict risks, energy prices and wheat supply disruptions, with the Monetary Policy Committee approving it by nine votes to one, effective 27 October The Express Tribune reported on 27 October.
Dawn lists three reasons businesses remain reluctant despite the headline turn: high borrowing costs; political uncertainties, including terrorism in two provinces; and a looming war in the region. Banks, for their part, face high risks in private-sector lending, and Dawn reported they have yet to provide enough liquidity to push the growth rate above its level of the past four years. That caution sits alongside a fiscal picture in which the FBR missed its four-month revenue target by Rs96 billion — a reminder that the state’s own financing needs continue to compete with private borrowers for bank balance sheets.
The political push behind the numbers
The government is not treating the turn as mission accomplished. Dawn reported that the prime minister once again reiterated that the Ministry of Finance should take action against banks delaying loan disbursements to farmers, small and medium-sized enterprises, and applicants under the Prime Minister’s Apna Ghar housing scheme Dawn reported on 3 November. That pressure matters for how the Rs87 billion should be read: part of the swing reflects administrative pushing of credit toward priority borrowers, not only spontaneous business demand. Whether it becomes broad-based investment borrowing is a different question — FY26 growth was 3.7%, a rate Dawn’s earlier report noted is considered insufficient to generate adequate employment and revenue, and last year the private sector still borrowed Rs1.46 trillion across the full year after a slow start Dawn reported on 20 October.
The wider balance-sheet context has improved in one respect: as Titans Infos reported when the PSX closed at 167,193 with SBP reserves at $21.52 billion and remittances up 12%, the central bank’s reserves give it more room than it had a year ago. But reserves do not lower a 12% policy rate, and it is the rate — plus the security and cost concerns Dawn lists — that will decide whether October’s swing survives into the winter data.
What to watch next
The next SBP releases will show three things: whether net borrowing holds above zero now that the 12% rate is in force for the full period; whether conventional and Islamic banks join the Islamic branches of conventional banks in net lending, or whether the turn stays narrow; and whether the government’s disbursement pressure produces loans to farmers and SMEs specifically, rather than to the largest corporates. For now, the verified fact is the swing itself — Rs87 billion borrowed against Rs29 billion retired a year ago — reported here from Dawn’s account of the SBP data, with no borrowing advice offered or implied.
