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KARACHI: The investment in government papers, mainly dominated by the banking sector, set a new record by crossing Rs10 billion mark.<\/p>\n
The State Bank of Pakistan (SBP), in its latest report published on Monday, showed that banks and non-banks, including corporate sector investments in government documents, reached Rs10.3 billion at the end of August. Most of these investments occurred in short-term documents.<\/p>\n
The banks' investment reached extraordinary levels at Rs7.94tr, reflecting their investment strategy to obtain maximum profits while investing in risk-free instruments and accounted for 77.1 percent of total investments, while the rest came from non-entities. banking, including insurance companies, funds and corporate sector amounting to Rs2,361tr.<\/p>\n
In addition, the World Bank in its latest report commented that the strong mobilization of short-term deposits, due to recent increases in interest rates, has been used for investments in government securities.<\/p>\n
The strategy of the banking sector changed from investing in long-term instruments, that is, Pakistan Investment Bonds (GDP) to short-term Treasury bills.<\/p>\n
The high interest rate has been the main driver of this direction, since the banking sector feels comfortable with high-yield investment in the short term and without risks. However, the trend has displaced the private sector.<\/p>\n
The banks invested Rs5,589tr in the short-term T letters until August 31. In addition, at auctions held after August 31, the continuing trend of investing in T letters indicates that high interest rates have encouraged banks to park their liquidity on government papers.<\/p>\n
The participation of banks in T-bills constituted 87.2 percent of total investments, while those of non-banks reached 12.8 percent or 820.8 billion rupees.<\/p>\n
In the scenario of high interest rates, T-bills have ruled out GDP as a relatively attractive investment option. The GDP lost attraction as the yields of the short-term papers have increased to the same levels as the yields of the GDP, while the banks found it difficult to mobilize long-term deposits.<\/p>\n
Bankers say that while the interest rate is not yet stable and is driven by inflation movements, mobilization of long-term deposits is almost impossible.<\/p>\n
The banks also invested Rs 62.5 billion in Islamic Sukuk bonds, while non-bank investments were Rs 8,500 million.<\/p>\n
They said that the increase in short-term domestic debt would continue to be a major obstacle for the government to stabilize the country's debt-to-GDP ratio, while debt vulnerabilities would prevail.<\/p>\n
The investments of the banking sector in government documents have already deprived the private sector of requesting additional funds.<\/p>\n
Posted on Dawn, October 15, 2019<\/em><\/p>\n<\/p><\/div>\n<\/pre>\n<\/pre>\n Source: https:\/\/www.dawn.com\/news\/1510910\/investment-in-govt-papers-reaches-record-rs103tr<\/p>","protected":false},"excerpt":{"rendered":" KARACHI: The investment in government papers, mainly dominated by the banking sector, set a new record by crossing Rs10 billion mark. The State Bank of Pakistan (SBP), in its latest report published on Monday, showed that banks and non-banks, including corporate sector investments in government documents, reached Rs10.3 billion at the end of August. Most […]<\/p>\n","protected":false},"author":1,"featured_media":8439,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[11077],"tags":[],"class_list":["post-8438","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-newspaper"],"_links":{"self":[{"href":"https:\/\/umang.pk\/en_us\/wp-json\/wp\/v2\/posts\/8438","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/umang.pk\/en_us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/umang.pk\/en_us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/umang.pk\/en_us\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/umang.pk\/en_us\/wp-json\/wp\/v2\/comments?post=8438"}],"version-history":[{"count":0,"href":"https:\/\/umang.pk\/en_us\/wp-json\/wp\/v2\/posts\/8438\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/umang.pk\/en_us\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/umang.pk\/en_us\/wp-json\/wp\/v2\/media?parent=8438"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/umang.pk\/en_us\/wp-json\/wp\/v2\/categories?post=8438"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/umang.pk\/en_us\/wp-json\/wp\/v2\/tags?post=8438"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}