Bank deposits rise 12.56 percent in August | Business | thenews.com.pk
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Business

September 15, 2017

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Bank deposits rise 12.56 percent in August

Bank deposits rise 12.56 percent in August

KARACHI: Bank deposits increased 12.56 percent to Rs11.414 trillion in August, the central bank’s data showed on Thursday, indicating customer preference to put their money into bank accounts.

The rise in banking sector deposits was also due to higher circulation of money in the system.        Deposits stood at Rs10.140 trillion in the same period of last year. Analysts attributed a jump in the deposits to higher growth in the business and retail bank accounts.   

“A growing customer deposit portfolio of banks is a positive sign for the banking industry…the increased private sector deposit portfolios of banks mean increasing economic and corporate activities,” said an analyst.

Customer deposits refer to current, savings, and fixed accounts of individuals and businesses. A closer look into the data on deposit distributed by category of deposit holders revealed that outstanding private sector deposits at banks rose 9.49 percent to Rs2.732 trillion in August.    

Deposits flows further indicate the relative parking of personal deposits increasingly with banks during the period under review. Personal banking deposits were up 9.43 percent to Rs5.557 from Rs5.078 trillion a year earlier.

However, the deposits of the retail sector faced 2.12 percent decline due to documentation of the transactions made by traders.   The Federal Board of Revenue has continued to charge 0.4 percent withholding tax on banking transactions of non-filers.   

The State Bank of Pakistan has also admitted that this levy has affected deposit growth, resulting in an increased use of hard cash and prize bonds for the settlement of transactions.   Banks have seen decreased deposit inflows during the last two years after the government imposed withholding tax on banking transactions for the non-filers.

The increase in banking sector deposits is a positive sign. Deposits came under pressure since 2015 due to host of reasons, monetary easing and, consequent fall in minimum saving rate, increase in withholding tax rate on banking transactions, and preference of depositor towards alternative modes, etc.

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