KIBOR falls by 64 basis points to 11.44%

The Karachi Interbank Offered Rate (KIBOR) saw a trimming of around 64 basis points (bps) on Tuesday following the State Bank of Pakistan's decision to cut the policy rate by 100bps a day earlier.

The KIBOR is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the Karachi or "interbank" money market.

The KIBOR rate slipped to 11.44% from 12.08% quoted on Monday, according to the data collected from banking sources.

The rate went down following the State Bank of Pakistan's decision to cut the interest rate by another 100 basis points to 11%, an almost three-year low.

The interest rate peaked at 22% last year. Since June, the SBP commenced monetary easing and the policy rate has been reduced by 1,100bps.

The KIBOR reached its peak in September 2023 climbing to almost 24.71%. Since then, the rate has been clipped by nearly half the value or by 12.63%.

Credit to private sector has already shot up and according to the latest figures posted on the website of the State Bank of Pakistan, during July 1 to April 25, the credit off-take amounted to PKR 705 billion as against PKR 208 billion recorded in the same period a year ago.

The data of SBP further revealed that due to relaxation in the interest rates, personal loans given rose to PKR 268 billion by end of March from PKR 239 billion recorded in June last year.

Meanwhile, auto loans also geared up and by March, total amount borrowed amounted to PKR 257 billion as compared with PKR 230 billion borrowed till June 2024.

Moreover, the amount flipped through credit cards rose to PKR 141 billion by March from PKR 122 billion of June last year, the data said.