The Services Sectors Table 24.5: Deposits, Advances and Number of Bank Branches Deposits Growth Rate(%) Advances Growth Rate(%) Ratio of Advances to Deposits 2001-02 1428 970 68.0 2004-05 2377 17.0 1759 19.8 74.0 2009-10 4661 13.5 3308 12.6 71.0 2014-15 9141 13.4 4576 6.5 50.1 2020-21 17435 10.8 8536 10.4 49.0 (March) Source: SBP (Rs in Billion) Number of Bank Branches Growth Rate(%) 7890 6803-4.9 9007 5.6 11705 10.9 14985 4.1 The important trend to note is the change in the ratio of bank advances to deposits. SBP specifies the maximum level as a regulatory measure. The worrying development is the decline in this ratio from the peak of 74 percent in 2004-05 to 49 percent in 2020-21. The basic reason for this is that there has been much faster growth in bank investments, mostly in Government securities, as shown in Table 24.6. Table 24.6: Growth in Different Types of Assets of The Banking System Investment* g(%) Advances g(%) Other Assets g(%) 2005 729 1801 1094 2010 1861 18.7 3233 11.7 1687 8.7 2015 5812 22.7 4576 6.9 2015 3.6 2021 12503 13.3 8536 10.8 3399 5.8 (end March) Long-Term 18.0 7.5 5.5 Growth Rate Source: SBP Total 3624 6781 12403 24438 g(%) 12.5 12.0 11.8 9.2 There is, therefore, evidence of a degree of‘crowding-out’ of private borrowers from the banking system. The growth rate in investments at 18 percent has been much higher than the growth rate in advances of below 18 percent. As budget deficits have increased, the Government has accessed the banking system much more via SBP with relatively high returns on Market Treasury Bills(MTBs) and Pakistan Investment Bonds(PIBs) The sectoral distribution of advances to the private sector by banks is also very skewed, as shown in Table 24.7. Almost 63 percent of the outstanding loans are to the manufacturing sector, with a share of only 11 percent in the GDP. Risk aversion of the banking system has led to a strong preference for large corporate clients. Consequently, while there 2.9 million borrowers, only 10,000 of the largest borrowers account for 72 percent of advances. 237