Aggressive lending to a particular segment of customers boosted the advances by Rs. 1.47 trillion in October 2024 because banks have to avoid penalties from the banking regulator for not attaining the target Advance-to-Deposit ratio.
The ADR of advance deposits in the banking sector also improved to 44.2 percent. According to the reports of the State Bank of Pakistan (SBP), total sector advances have risen to Rs. 13.77 trillion in October, compared to 12.30 trillion reported at September end; increased by more than 11 percent month on month.
In September 2024, the banking sector advances raised by Rs. 497 billion and stood at Rs. 12.30 trillion after having been valued at Rs. 11.80 trillion in the previous month, August. On the other hand, the deposits of the banking sector slightly fell to Rs. 31.11 trillion in October compared with the Rs. 31.34 trillion reported in September, and the ADR of the banking sector was at 39 percent.
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Reduction in deposits was a result of discouragement from banks regarding savings while lower saving rates affected the decline of a slight rate in the banking sector deposits.
The SBP data indicate that the investment was also reduced in the month by Rs .1.7 trillion or by 5.7 percent from the previous month up to a level of Rs .28.9 trillion. The investment-deposit ratio diminished to 93 percent in October as against 97 percent in September.