The private sector again showed reluctance in borrowing from banks, despite its better performance in the previous financial year.
The latest data released by the State Bank on Monday showed that the private sector has started retiring debt instead of fresh borrowing from banks.
The net credit to the private sector since July 1 to August 22 was negative Rs68 billion, a sharp contrast with the trend in the second half (January-June) of FY14 when it was Rs384bn.
The last fiscal year was a turning point for the private sector credit off-take as it was negative Rs19bn in FY13. However, this trend has failed to continue.
Apart from other reasons like sluggish economic growth and poor economic policies, the recently developed political turmoil also played a negative role. Though the uncertainty on political front has been rising for several months, the beginning of August proved fatal.
Despite much better credit off-take by the private sector in FY14, the private sector investment remained dull.