Bank lending to the private sector decreases by 74%.

The private sector is currently forced to borrow expensive sums in order to operate their businesses or plan expansion due to the unpredictable scenario brought on by the continued political and economic upheaval.

The State Bank of Pakistan (SBP) reports that as the fiscal year's end approaches, bank advances to the private sector have been declining. Private sector borrowings plummeted from Rs1,036.6 billion during the same period previous year to Rs266.4 billion in the first nine months of the current fiscal year, a decrease of 74.3%.

In addition to being the main cause of the ongoing political and economic unrest, the record interest rate was also to blame for the significant fall in loan offtake to the private sector. Bankers claim that the current economy is full of risks, yet money never invests in risks.

Banks like to deposit their cash in government assets in order to produce risk-free, high returns, as was shown during the most recent Treasury Bill auction on April 4. Despite the maturity amount being much lower than the desired amount of Rs900 billion, the government chose Rs2.2 trillion.

Bankers believe it to be impossible to invest expensive funds in successful businesses, particularly in the wake of inflation that is continuing on the rise. While entirely failing to achieve the strategy's main objective of limiting inflation, the SBP's fast rises in interest rates have just made money more expensive than ever.