Rs88bn borrowed by construction sector in first half of FY20-21

KARACHI: The construction sector marked a 44 per cent growth, as borrowing from the banking institutions was recorded at Rs88 billion during the first half of the current fiscal year 2020-21.

The increase has been linked to tax incentives and lower interest rates offered to the construction industry. The volume of borrowings by the industry is expected to grow more due to the increase in construction activities and mark-up subsidy scheme of State Bank of Pakistan (SBP).

As per the data released by the SBP, residential sector borrowed a sum of Rs41bn, whereas the commercial sector borrowed Rs47bn, marking an increase of 41% and 51% during the period Jul-Dec 2020.

Construction companies attached to the Furthermore, change in the SBP policy in which banks are required to lend 5% of their advances to the construction sector will also increase the borrowings.

In South Asia, Pakistan has the lowest construction-to-GDP ratio standing at 2.5% against the regional average of 7 to 8 per cent.

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