Liquidity Inject: Private Sector Borrowing Surges to Rs 589 Billion Amid SBP’s Policy Shift. -

Pakistan’s private sector is making a strong comeback, borrowing a staggering Rs 588.68 billion from banks during the first half of FY2026 (July 1, 2025, to January 16, 2026). This surge represents a strategic revival in industrial activity, even as businesses navigate a year-on-year decline in total credit volume compared to the previous fiscal year.

Strategic Measures to Boost Growth

The government and the State Bank of Pakistan (SBP) have introduced key initiatives to facilitate industrial and export growth:

Export Refinance Rate: The federal government slashed the rate by 300 basis points to 4.5% to provide immediate relief to export-oriented sectors.
CRR Reduction: While keeping the policy rate at 10.5%, the SBP reduced the Cash Reserve Requirement (CRR) from 6% to 5%.
Liquidity Unlock: Expert banker Mir Bakhtiar Ali Khan noted that every 1% reduction in the CRR can release at least Rs 300 billion into the banking system, significantly enhancing lending capacity for Large-Scale Manufacturing (LSM).

Industry Feedback & Challenges

PHMA’s Stance: Muhammad Babar Khan, Central Chairman of the Pakistan Hosiery Manufacturers & Exporters Association (PHMA), welcomed the relief but warned that high production costs remain a hurdle.
Energy Tariffs: Industry leaders emphasize that for exports to remain regionally competitive, the government must address high energy costs and electricity tariffs.
SME Integration: Analysts urge the banking sector to better integrate young e-commerce entrepreneurs and start-ups into the formal financial system to ensure inclusive and sustainable economic growth.