Pakistan Banks Cut Lending by 10% to Avoid Paying More Taxes

Pakistan banks’ lending declined by 10 percent from Rs. 15.66 trillion as of December 27, 2024, to Rs. 14 trillion as of February 21, 2025. Meanwhile, the Gross Advance to Deposit Ratio (ADR) now stands at 46 percent, compared to the peak of 52 percent recorded in December 2024. According to Topline Securities, the decline in lending was expected as banks temporarily parked their funds to meet the Gross ADR target of 50 percent by December 2024 to avoid additional tax. Meanwhile, financing from commercial banks to the private sector has surged by over 250 percent so far in the current financial year, primarily due to a gradual decline in interest rates in recent months, along with banks’ strategies to balance their advance-to-deposit ratios.