KARACHI: Scheduled banks’ investments rose sharply by Rs5.8 trillion during the first nine months of 2025, underscoring their growing preference for government securities amid muted private sector credit demand and the state’s rising financing requirements.
According to the latest data released by the State Bank of Pakistan (SBP), total investments of scheduled banks reached Rs35.85 trillion by September 2025, compared to Rs30tr in January — an increase of 19.3 per cent. The banking sector’s total assets now stand at 52.4 per cent of GDP, up from 49.1pc in the previous fiscal year.
The SBP report indicated that the banking sector remains stable across major indicators, although concerns persist over sluggish credit flow to businesses. Banks have continued to channel most of their liquidity into government papers, which offer risk-free returns, rather than extending credit to the private sector.
Banks continue to rely heavily on government papers for profits, while private lending remains subdued.https://t.co/Kga6jIhilg
— Dawn Business (@dawn_business) October 29, 2025
Despite the central bank keeping its policy rate unchanged at 11pc in its most recent monetary policy announcement, business groups maintain that borrowing costs are still too high to support new investment. Advances by banks fell to Rs13.46tr by September from Rs14.73tr in January — a decline of Rs1.27tr — reflecting weaker private sector borrowing.
Corporate investment in government securities also increased, reaching Rs7.86tr by June 2025, accounting for nearly 17pc of total holdings. Analysts say the shift shows rising risk aversion among companies that prefer secure returns on surplus funds rather than undertaking new projects.
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Meanwhile, banks’ deposits climbed by Rs4.19tr during the same period, reaching Rs35.21tr by September from Rs31tr in January.
The government’s interest payments for FY25 were recorded at Rs8.89tr, slightly below the initial projection of Rs9.8tr, due to easing rates and limited fiscal pressure.
Economists caution that while the banking sector’s profitability and stability remain strong, the growing concentration of funds in government debt could limit private sector credit availability and weigh on broader economic recovery.
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