Public money is pouring into the banking system quite significantly as the deposits of the industry have reached an all-time high of Rs 11.9 trillion during June 2017, according to statistics available from State Bank of Pakistan (SBP).
This indicates that the utility of the banking system is increasing among the public for formal transactions of money as well as for saving purposes.
This is the highest level of deposits maintained by the banking industry including commercial banks, microfinance banks and Development Finance Institutes (DFIs). Previously, the deposits of the banking industry reached the level of Rs 11.2 trillion in December 2016.
The deposits of the banking industry fell sharply to Rs 10.70 trillion in January 2017 mainly due to outflows of cash in different sectors including agriculture and manufacturing.
Gradually, cash flows improved in the commercial banks to regain the level of deposits through the different varieties of accounts which consistently enhanced the money under deposits of the banking industry.
Interestingly, the banks’ deposits are growing in spite of the fact that incentives are rather limited and unattractive, keeping in view the low interest rates which offer lesser profit/spread to consumers. Nonetheless, it is a good trend that formal banking channels are being used increasingly for the purpose of personal and commercial requirements by consumers and organizations.
According to the breakup provided by the central bank, the overall deposits maintained by commercial banks for residents stand at Rs 11.46 trillion. On the other hand, the deposits maintained by banks for non-residents stand at Rs 126 billion.
The bank deposits maintained in personal accounts (savings and currents) mainly by banking consumers are at the highest value of Rs 5.53 trillion. Among them, banks deposits maintained by businessmen and entrepreneurs stand at Rs 2.57 trillion. The salaried class maintains deposits of Rs 1.25 trillion in bank accounts usually in saving and current accounts.
Moreover, students, housewives, retired persons and etc, banks deposits stand at Rs 1.701 trillion by end of June 2017.
According to data provided by SBP, multinational, local companies and SMEs deposits in the commercial banks stand at Rs 2.88 trillion.
Deposits maintained by the federal, provincial and local government with different banks are also of the substantial value of Rs 1.58 trillion.
Non-Financial Public Sector Entities and Non-Banking Finance companies also maintained deposits of good values including Rs 705 billion and Rs 399 billion.
The high tax rate of cash withdrawal should be removed or decreased to improve the value of deposits which will also enhance the use of formal banking channel by the public.
Means people are getting used to withholding tax on cash withdrawls…… and FBR.
Just like the inmates get used to and does everything in front of cameras in Big Boss.