KARACHI: The car financing has significantly declined by 55.3 percent during first quarter of current fiscal year due to restriction imposed by the government on non-filers to purchase cars.
Banks have extended car loans amounting Rs5 billion during first quarter (July – September) of fiscal year 2018/2019 as compared with Rs11.2 billion in the same quarter of the last fiscal year, according to a report released by State Bank of Pakistan (SBP).
The central bank said that after rising consistently for the last four quarters, the flow of consumer financing decelerated to Rs 15.3 billion in Q1-FY19.
“In particular, the off-take of car loans in Q1-FY19 more than halved compared to the same quarter last year, with banks also receiving much fewer applications for car loans in Q1-FY19 compared to the same quarter last year,” the central bank said.
The government’s decision of barring non-filers from purchasing/ registering vehicles mainly contributed to this slowdown, as complying with government directives, two of the three largest auto assemblers had suspended advanced car bookings for non-filers back in May 2018.
The decelerating impact of autofinance on overall consumer financing was offset to a large extent by the Rs3.5 billion rise in personal loans during Q1-FY19.
Data suggests that some banks having high branch penetration and a large customer base of salaried class were able to push further in this segment during the quarter under review.