Despite a better credit off-take by the private sector, banks did not change their strategy to maximise their investment in government papers in the fiscal year 2014, a report of the State Bank reveals.
“Banks’ holding of government securities now stands at 83 per cent of their total liquid assets maintained,” said the State Bank’s quarterly Compendium July-2014.
For more than five years, banks’ over 80pc liquidity has been lying with government papers which has hugely damaged the role of private sector in economic growth.
Banks have over Rs4 trillion in government papers which keeps them profitable despite poor economic growth and slump in the global financial market.
Analysts say that 50pc of this huge investment in government paper could produce revolutionary impact for economy if this liquidity is directed towards private sector.
