The government’s costly borrowing through Pakistan Investment Bonds (PIBs) enriched banks as top five banks profit increased by 25 per cent in the first half of the current calendar year.
In the second half of the fiscal year 2014, the government borrowed massively through PIBs.
The three-year PIBs offer 12.5pc return while maximum return on T-bills is 9.97pc. This huge gap of 2.5pc attracted maximum investment by banks in PIBs.
Banks keep their 83pc liquidity with government securities.
It surprised many analysts why government borrowed costly money instead of cheaper money through treasury bills. The costly money adds more burden to a heavily indebted government.
Banks’ holding of PIBs rose to Rs2.170 trillion while the stock of T-bills was Rs1.60tr till June 30, 2014. Total PIBs worth Rs3.223tr were sold by the government.
