KARACHI: The impressive growth of non-bank financial institutions (NBFIs), hailed by the State Bank of Pakistan (SBP) in 2024, has quickly unravelled as liquidity exited the sector during the first five months of the current fiscal year.

Despite repeated SBP exhortations and government encouragement, banks have withdrawn liquidity from NBFIs. The liquidity had been pumped in at the end of calendar year 2024 to avoid a tax imposed by the government on banks.

The latest SBP data shows that NBFIs received no fresh lending from banks during July-November. Instead, the sector witnessed net debt retirement of Rs340 billion.

Banks had earlier pumped a record over Rs1 trillion into NBFIs to avoid an incremental tax in case........

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