The Advance-to-Deposit Ratio (ADR) of Pakistan’s banking sector rose to around 38% by November 2025, supported by a Rs1.5 trillion expansion in private sector credit during the current fiscal year, indicating increased deployment of liquidity as economic conditions improve.
In a statement, the Pakistan Banks Association said recent media reports citing an ADR of 35% were based on outdated June 2025 data and do not reflect the sector’s current position. The association said lending activity has picked up steadily since the start of FY26, lifting the ratio by November.
The PBA said comparisons with regional peers such as India and Bangladesh overlook structural differences, noting that Pakistan finances nearly 99.8% of its fiscal deficit through commercial banks. This reliance, it said, limits the scope for banks to match lending ratios seen in economies with different fiscal architectures.
The association also highlighted the impact of the informal economy, pointing out that currency in circulation stood at about Rs11 trillion as of November 2025, equivalent to roughly 34% of GDP. With scheduled bank deposits at Rs35.38 trillion, cash outside the system accounts for nearly 31% of total deposits, constraining financial intermediation.
Despite these constraints, the PBA said banks have continued to support economic activity. In the SME segment, the borrower base increased 57% year-on-year to 276,578 in FY25, with outstanding financing rising 41% to Rs691 billion. In agriculture, the number of borrowers recovered to nearly 2.9 million in FY25, backed by record disbursements of Rs2.58 trillion.
Digital adoption also accelerated, with app-based banking transactions rising from 2.8 billion in FY23 to 6.2 billion in FY25, while Raast transactions increased from 147 million to nearly 1.3 billion over the same period.
The association said achieving lending ratios comparable to regional markets will depend on reduced government reliance on bank borrowing and faster formalisation of the economy through a shift from cash to digital transactions.
