Private Sector Bank Borrowing in Pakistan Surges Over 3,700% in Four Months

Private sector borrowing from commercial banks in Pakistan rose sharply during the first four months of FY27, reaching Rs. 217 billion compared with Rs. 5.685 billion in the same period last year — an increase of about 3,717%, according to data released by the State Bank of Pakistan (SBP).

The figures show that businesses and other private borrowers obtained significantly more financing between July and October 2026, even though borrowing costs remained relatively high. The data also highlights a clear split in how different parts of the banking sector extended credit.

Pakistan's six full-fledged Islamic banks recorded net repayments of Rs. 7.6 billion during the period. These banks are Meezan Bank, Faysal Bank, BankIslami, Dubai Islamic Bank, Al Baraka Bank and MCB Islamic Bank. In contrast, conventional banks provided around Rs. 70 billion in net financing to the private sector, while their Islamic banking branches and windows extended another Rs. 154 billion. Taken together, conventional banking groups and their Islamic operations accounted for the bulk of private sector financing in the four-month window.

The pattern differs from the same period last year, when private borrowers made net repayments to conventional banks while the Islamic banking industry continued to provide financing. Banking analysts linked the current increase in borrowing to government-backed financing schemes covering housing, small and medium enterprises, agriculture and export-oriented businesses.

Analysts also noted that companies borrowed more to meet day-to-day working capital requirements and to finance new investments despite elevated interest rates. Consumer financing has picked up as well, with banks reporting stronger demand for car loans, credit cards, personal loans and financing for consumer goods.

The sharp rise in private credit comes as Pakistan's banking sector continues to balance high policy rates with efforts to expand lending to productive sectors. The SBP data suggests that both corporate and household demand for bank financing strengthened in the early months of the fiscal year.

The SBP publishes monthly and periodic data on private sector credit, which is closely tracked by analysts as an indicator of business confidence and economic activity. Further movement in lending trends will be watched in the coming months as financing schemes and interest rate conditions evolve.