Pakistan banks’ credit to private sector in ratio of GDP declines over past three decades

State Bank of Pakistan Governor Jameel Ahmad said commercial bank lending to the private sector trails peer emerging economies, according to Business Recorder. Speaking at the 11th Pakistan Banking Awards 2026 on Friday, he noted that the private sector credit-to-GDP ratio has fallen markedly over the last thirty years. Government financing needs alone did not explain this, as several emerging economies with more domestic government debt have much higher private credit ratios.

He urged banks to shift toward deeper retail deposit mobilisation and more private-sector lending, calling the sector vital to the country's next growth phase. He said stabilisation, though achieved, was not enough by itself to reach high and sustainable growth. Total banking assets were Rs69 trillion and deposits Rs43 trillion by end-June 2026, with profitability strong and the Capital Adequacy Ratio comfortably above international and domestic requirements.

Ahmad acknowledged that banking assets and deposits are still small relative to GDP compared with peers, and that the currency-to-deposit ratio is elevated. He described the economy as resilient through a demanding FY26 hit by severe flooding, geopolitical strains and unpredictable global trade conditions. Average inflation sat near the medium-term target band, and the current account deficit held near the floor of its projected range. Foreign exchange reserves, which rose mainly through SBP purchases of foreign currency, comfortably topped the $18 billion end-June target.