The borrowing from commercial banks, however, was significantly lower than the auction target of Rs160 billion as banks were seeking higher returns on extending financing to the state. The government on Wednesday borrowed almost the entire amount, ie Rs70.76 billion, through the sale of three-year PIBs at 19.32% rate of return. The return could have gone significantly higher had the auction target of Rs160 billion been met. The government cannot directly borrow from the central bank and is bound to acquire financing from commercial banks under the IMF loan conditions. Central bank lending through the printing of new currency notes has been a major cause of high inflation in the country.
