Private sector borrowing from commercial banks surged 3,717 percent during the first four months of FY27, reaching Rs. 217 billion compared with Rs. 5.685 billion in the same period last year.
According to data released by the State Bank of Pakistan (SBP), net financing to the private sector increased sharply between July and October 2026, despite relatively high interest rates.
The data shows a significant difference in lending activity between conventional banks, their Islamic banking operations and full-fledged Islamic banks.
The country’s six full-fledged Islamic banks recorded net repayments of Rs. 7.6 billion during the period. These include Meezan Bank, Faysal Bank, BankIslami, Dubai Islamic Bank, Al Baraka Bank and MCB Islamic Bank.
In contrast, conventional banks provided around Rs. 70 billion in net financing to private borrowers. Their Islamic banking branches and windows extended another Rs. 154 billion.
This brought the combined net financing by conventional banks and their Islamic banking operations to around Rs. 224 billion during the four-month period.
The trend marks a shift from the previous fiscal year, when conventional banks recorded net repayments by private borrowers, while the Islamic banking industry continued to extend financing.
Banking analysts linked the increase in borrowing to government-backed financing schemes for housing, small and medium enterprises (SMEs), agriculture and export-oriented businesses.
They also said companies were increasingly using bank financing to meet working capital requirements and fund new investments despite the high cost of borrowing.
Consumer financing has also gained momentum, with banks reporting stronger demand for car loans, credit cards, personal loans and financing for consumer goods.
