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

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

Key points

• "Profitability remained strong and banks' Capital Adequacy Ratio continued to remain comfortably above both international benchmarks and domestic regulatory requirements, " he remarked.
• Pakistan's GDP expansion for FY26 to remain above govt estimate, states SBP chief.
• Jameel Ahmad asks banks to reorient their business models towards stronger retail deposit mobilisation and greater private-sector financing.
• There was considerable room to further reduce reliance on cash and strengthen the deposit base.
• SBP chief sees Pakistan's current account in surplus for FY26.

Pakistan's central bank governor pressed commercial banks to boost private sector lending and retail deposits, noting current levels are low compared to peer economies despite overall banking sector resilience and economic stabilization. Low private sector credit-to-GDP ratio in Pakistan. Banks' critical role in sustainable economic expansion. Pakistan's banking sector resilience and solid profitability. Add BRecorder as a trusted source on Google.

According to State Bank of Pakistan (SBP) Governor Jameel Ahmad has, commercial banks' lending to the private sector remains well below levels seen in peer economies in the emerging markets, while the private sector credit-to-GDP ratio declined significantly over the past three decades in the country.

"The government's budgetary financing needs were not the only explanation for this trend, as several emerging economies with higher government domestic debt have significantly higher private-sector credit-to-GDP ratios, " the central bank chief remarked while speaking at the 11th Pakistan Banking Awards 2026 on Friday.

"Policymakers had achieved the tough task of stabilising the economy. Nevertheless, stabilisation alone was not sufficient to put Pakistan on a path of high and sustainable expansion. The banking sector has a particularly significant role to play in this next phase."

While deposits stood at Rs43 trillion at the end of June 2026, highlighting the resilience of the banking industry, the SBP governor observed that banks' total assets reached Rs69 trillion.

While "Pakistan's currency -to-deposit ratio remains elevated, despite substantial expansion, the SBP governor went on, banking-sector assets and deposits remain relatively low as a share of GDP compared with other emerging markets. There was considerable room to further reduce reliance on cash and strengthen the deposit base".

He further remarked Pakistan's economy had demonstrated resilience despite a challenging FY26 marked by domestic and external shocks, including severe floods, geopolitical tensions and an uncertain global trade environment.

According to Ahmad, inflation averaged close to the medium-term target range, inflation expectations remained broadly anchored, and the current account deficit stayed close to the lower bound of the projected range.

Foreign exchange reserves additionally continued their upward trajectory, comfortably exceeding the end-June target of $18 billion, with the quality of reserve accumulation improving as the rise was driven mainly by SBP's foreign exchange purchases rather than debt-driven accumulation, he noted. SBP highlights progress towards economic stability. SBP chief sees Pakistan's current account in surplus for FY26.

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Taken together, the developments around pakistan banks' credit to private sector in ratio of GDP declines over point to a situation that is still moving, and the coming days should bring more clarity.