Government Raises Rs660 Billion in T-Bills Auction Against Rs2.52 Trillion Bids

By Bilal Ahmed  |  Business Desk  |  October 15, 2026  |  Updated: October 15, 2026

The government raised Rs660.06 billion through the State Bank’s Market Treasury Bills auction on Wednesday, October 14, 2026 — and the headline number is not the raise but the demand. Banks and investors bid a staggering Rs2.52 trillion (Rs2.64 trillion at face value), meaning the auction was oversubscribed nearly four times over. Settlement took place today, October 15.

In plain terms: the government wanted to borrow, and the banks were practically queuing up to lend. That tells you a lot about where Pakistan’s money markets are right now — and what investors expect from the monetary policy announcement due on October 26.

The Numbers in Detail

Of the competitive bids, the government accepted Rs400.36 billion realised (Rs417.61 billion at face value) against bids worth Rs2.52 trillion realised. On top of that came Rs259.70 billion in non-competitive bids — taking the total to Rs660.06 billion.

The 3-month paper was the crowd favourite, drawing Rs301.86 billion, followed by the 6-month tenor at Rs227.84 billion. The 1-month paper took Rs112.98 billion. The 12-month bill, tellingly, got only Rs17.37 billion — investors are not locking in for a full year right now.

One detail worth noting: provincial governments themselves bid Rs194.67 billion, all in the 3-month tenor on a non-competitive basis. When even provinces are parking cash in T-bills, liquidity is clearly sloshing around the system.

A small reporting note: Dawn’s figures put the total slightly higher at Rs685.5 billion (Rs417.6bn competitive plus Rs267.9bn non-competitive) — the difference is the realised-versus-face-value convention. The State Bank-derived realised total of Rs660.06 billion is the cleaner number, and that is what we use here.

Why Banks Are Lending This Much

This was the last T-bills auction before the monetary policy announcement on October 26, and that timing explains the stampede. With the policy rate at 11.5%, cut-off yields on the 3, 6 and 12-month papers all came in above the policy rate — 11.9999%, 12.3989% and 12.4999% respectively. In other words, banks are being paid more to park money with the government than the policy rate would suggest.

Why would banks demand more? Because they are parking liquidity amid uncertainty. When you are unsure which way rates move on October 26, you keep your money short — hence the dominance of the 1, 3 and 6-month tenors and the near-total avoidance of the 12-month paper. Short tenors mean you get your money back quickly if the policy picture changes.

There is also a bigger story here. T-bill yields rising above the policy rate is the market’s way of saying it expects tighter conditions, or at least does not expect rate cuts any time soon. Banks are demanding a premium for locking in government paper — and the government, which needs the borrowing, is paying it.

What This Means for Ordinary Savers

You are not bidding at T-bill auctions, but this auction still touches your pocket:

Bank deposit rates. When banks can earn 12%+ lending to the government risk-free, they have little incentive to pay you more on savings accounts. High T-bill yields are part of why your savings account still feels stingy.

National Savings Schemes. NSS profit rates track government borrowing costs. Persistent high yields at T-bill auctions are a signal, not a promise — but they shape the environment in which NSS rates get reviewed.

Business borrowing. Everything private borrowers pay is priced off government paper. If the government itself is paying 12%+, loans for businesses — and eventually consumers — do not get cheaper. That is the trade-off of heavy government borrowing: the state crowds out everyone else.

Your takeaway: if you have idle cash and a low risk appetite, this is a decent environment for short-term government instruments. Just understand you are lending to a government that is borrowing very, very heavily — and ask your bank or advisor about the exact products available to individuals.

The Crowding-Out Problem, Honestly

Let me say the quiet part out loud. A 4x oversubscribed auction sounds like a success — the government raised what it wanted. But it is also a symptom. Rs2.52 trillion of bids means the banking system has enormous liquidity and would rather lend it to the state at 12% than lend it to businesses, farmers and manufacturers.

That is rational for each individual bank and corrosive for the economy as a whole. Every rupee a bank puts in a T-bill is a rupee not financing a factory, a trader’s working capital or a new business. Pakistan has lived with this crowding-out for years, and auctions like Wednesday’s show it is not going away.

The October 26 monetary policy decision will tell us whether the State Bank sees the same picture the market sees. If rates hold or rise, expect more auctions exactly like this one.

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