Bank deposits fall over Rs1tr in January

KARACHI: The deposits of the banking system have dropped over Rs1 trillion in January 2022 after declining from a record high of around Rs21 trillion in December 2021, according to the data released by the State Bank of Pakistan (SBP).

The total deposits of the banking system fell to Rs19.95 trillion by the end of January 2022, compared with Rs20.97 trillion by December 31, 2021.

Banking sources said a fall in deposits was witnessed due to the end of the financial year for institutions. The financial year ends on December 31 for the banking system.

“Due to closing on December 31, the banks make all efforts to build their deposits for making books attractive,” a banker said.

In January every year, major withdrawal is recorded from those depositors, who just deposited to help banks in improving their financial accounts, the banker added.

The deposits of the banking system by the end of January 2022 at Rs19.95 trillion are still 17 per cent higher, compared with Rs17.08 trillion by the end of January 2021.

Experts attributed the massive growth in deposits to a hike in interest rates by the State Bank of Pakistan (SBP). The central bank increased the key policy rate by 100 basis points to 9.75 per cent in its policy statement announced on December 14, 2021. Cumulatively, the rate was increased 2.75 per cent in the three consecutive policy announcements.

The deposits of the banking system recorded a jump of 214 per cent during the last one decade to Rs21 trillion on December 31, 2021 from Rs6.68 trillion by the end of 2012.

The sources said the bank deposits were also rising, as the holders of prize bonds and saving certificates were also parking their investments in the banking system. The government has made it mandatory for the saving schemes, ie, certificate holders of accounts to ensure sharing all the details with the Central Directorate of National Savings.