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Islamabad Chamber of Commerce and Industry shows concern over hefty decline in credit facility to private sector

Islamabad, January 08, 2016 (PPI-OT): Islamabad Chamber of Commerce and Industry has shown concerns over the shrinking credit facility to private sector as it would constrain the growth of business and industrial activities and create more hurdles in the way of efforts aimed at economic revival of the country.

Atif Ikram Sheikh, President, Islamabad Chamber of Commerce and Industry said that the amount of loans extended by commercial banks to the private was on the decline. He said as per SBP Annual Report 2014-15, overall credit to private sector saw a lower expansion of Rs.208.7 billion during FY15, compared with Rs.371.4 billion in FY14 which shows 44% decline in credit for private sector in one year. He said the quantum of credit to private sector as a percentage of GDP has also shrunk from 27 percent in 2007-08 to 13 percent in 2013-14.

He said many countries were achieving better economic growth by providing enhanced credit to private sector but Pakistan’s credit-to-GDP ratio was still substantially low as compared with many other countries. He said as per World Bank’s data for the period 2011-15, domestic credit to private sector in Japan as a percentage of GDP was 187.5 percent, Denmark 178.7 percent, Thailand 146.7 percent, South Korea 138.5 percent, Malaysia 120.6 percent, Turkey 74.6 percent, Indonesia 36.5 percent, but in Pakistan it was just 15.6 percent, which clearly showed that successive governments in Pakistan have not paid any serious attention to provide easy lending to SMEs in order to facilitate the private-sector led growth of the economy.

ICCI President said another flaw in our bank lending was that bank credit in Pakistan was heavily skewed towards big corporations because according to SBP annual report, more than 80 percent of the total loans by the banking sector was given to big borrowers while the rest was going to SMEs and other small borrowers. He called upon the government to look into these anomalies in bank lending and take measures for rationalizing and enhancing the share of banking credit for SMEs so that these business entities could drive the country on fast track economic growth.

For more information, contact:
Khalid Chaudhry
Islamabad Chamber of Commerce and Industry (ICCI)
Chamber House, Aiwan-e-Sanat-o-Tijarat Road,
Mauve Area, G-8/1,
Islamabad, Pakistan
Tel: +9251 225 0526, 2253145, 8432676
Fax: +9251 225 2950
Email: icci@brain.net.pk
Website: www.icci.com.pk

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