Non Performing Loans (NPLs) in the banking sector rose to an unprecedented level of Rs 473 billion at the end of June because of higher interest rates, the economic slowdown and increased production costs. The State Bank of Pakistan on Thursday revealed that an increase of some Rs 1.907 billion was witnessed in the NPLs of banks and DFIs during the second quarter of the current calendar year (April-June).
NPLs of banks and DFIs mounted touched Rs 473.891 billion as on June 30, 2010 from Rs 471.984 billion on March 31, 2010. Sources in the banking sector said although some increase was witnessed in NPLs, however, the current increase was less than previous quarters.
The rise in NPLs poses a significant threat for the banking sector and the State Bank of Pakistan has been advised to develop policies to contain this.
