KARACHI: Investment in government securities cross the Rs10 trillion mark to Rs10.3 trillion for the first time, data showed in the latest report released by the State Bank of Pakistan (SBP).
SBP data showed that banks and non-banks including corporate sector investments in the government papers reached Rs10.3 trillion by the end of August. The majority of this investment came in the form of short term papers.
The World Bank in its latest report commented that the strong short-term deposit mobilisation, due to recent increases in policy rates, has been utilised for investments in government securities, reported Dawn.
The banking sector’s strategy changed from investing in long-term instruments ie Pakistan Investment Bonds (PIBs) to short-term Treasury bills.
The high interest rate has been the major driver for this direction as the banking sector is comfortable with high-yield short-term risk-free investment. However, the trend has crowded out the private sector.
In the high interest rate scenario, the T-bills have edged out PIBs as a relatively attractive investment option. The PIBs lost attraction since the returns on the short-term papers have risen to the same levels as the return on PIBs while the banks found it hard to mobilise long-term deposits.
