Corporate Borrowing on the rise despite recession

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Corporate Borrowing on the rise despite recession

Pakistan is facing an economic recession and it is thought that almost every business is facing difficulties. However, not everything is turning bad. Some of the leading companies have borrowed and invested more and more in these difficult times.

The automotive sector, real estate, IT and Telecommunications, and pharmaceutical sectors remained positive during these difficult times. These sectors have taken more loans from commercial banks at a time when some of the big companies are no longer able to repay their debts to banks and have been waiting for the return of auspicious times.

The real estate sector has made a net borrowing of 5.33 billion rupees in the last three months. Thus, the outstanding borrowing rose to 33.64 billion rupees, published the State Bank of Pakistan (SBP) on Wednesday.

Pakistan Investment Real Estate Forum President Shaban Elahi was surprised by the increase in outstanding loans. “The increase in borrowing may be due to some real estate activity in the industrial sector. Some people may have borrowed,” he said.

“Borrowing was most likely undertaken to address the lack of working capital by industry players, as automakers have yet to clean up their inventories ,” said Ali Asghar Jamali, CEO of Indus Motor , He said it could take another four to six months for all car sales orders booked in the near past to be delivered. “The order placement from March to April can lead to a significant decline in commercial lending from automakers and other industry vendors, as the economic slowdown has severely impacted the production and sale of cars,” he added.

Commercial borrowing by IT & Telecommunication has risen by Rs 15.89 billion or 11.58% to Rs 153.03 billion in the last three months compared to Rs 137.14 billion on 30 June 2019.

Industry representatives who demanded anonymity indicated that the increase in borrowing may be mainly due to a large number of infrastructure development activities by mobile operators.

Sadiq Saleem Author
Sadiq Saleem is a professional Web Developer, Researcher and a Digital Marketing Expert with a passion to write for Technology, Career, and Education
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Sadiq Saleem Author
Sadiq Saleem is a professional Web Developer, Researcher and a Digital Marketing Expert with a passion to write for Technology, Career, and Education
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