New record- Investment in government papers crosses Rs10 trillion mark

Banks’ investment reached to extraordinary levels at Rs7.94tr reflecting their investment strategy.

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  • Recently the banking sector has changed its strategy from investment in long-term investments to short-term treasury bills.
  • Until August 31, Rs5.589 trillion has been invested in the short-term T-bills by the banks.
  • A total investment of 87.2% has been constituted by the bank’s share of T-bills, whereas others reached 12.8% or Rs820.8 billion.

government papers

Investment in the government papers sets a new record in banking, as it has crossed the mark of Rs10 trillion.

A report released by the state bank of Pakistan on Monday said banks and non-banks along with corporate sectors in the government paper reached Rs10.3 trillion by the end of August.

Investment in banks has reached surprising levels at Rs7.94 trillion mirroring their investment policy to reserve maximum incomes. Investment in banks has reached extraordinary levels at Rs7.94 trillion mirroring their investment strategy to book maximum profits.

Free-Risk Instrument

Banks have invested in risk-free instruments and made up for 77.1% of total investments. Moreover, Rs2.361 trillion has been collected from non-banks including funds, insurance companies, and the corporate sector.

Recently the banking sector has changed its strategy from investment in long-term investments to short-term treasury bills.

Short-Term T-Bills

Until August 31, Rs5.589 trillion has been invested in the short-term T-bills by the banks. The consistent trend to invest T-bills after the auction held after August 31 shows that high-interest rates have fortified to park their liquidity in government papers.

A total investment of 87.2% has been constituted by the bank’s share of T-bills, whereas others reached 12.8% or Rs820.8 billion.

The interest rate is still unstable and is channeled by the drive-in inflation.

The investment worth Rs62.5 billion has been invested by the banks in Sukuk Islamic bonds, whereas investment worth Rs8.5 billion has been invested by non-banks.

The private sector is already driven to borrow additional funds due to the banking sector’s investment in government papers.


Also See: Hot Money Getting Hotter In Pakistan: T-Bills Stood At $327 Million In Sep

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