Banks have been unable to meet the rising demand for cash during Ramazan with dozens of automated teller machines (ATMs) reportedly running out of cash over the last two days.
Banks are failing to provide the required volume of petty cash at their branches. Some have suggested that these banks are trying to retain cash for as long as possible in order to profit from it. This approach has become the norm, and most banks have been engaging in this practice for the past few months.
Exchange Companies Association of Pakistan (ECAP) General Secretary Zafar Paracha said currency inflows in Ramazan are higher and more cash is needed to facilitate customers. In the final days of the holy month, demand for foreign currency or dollars generally decreases because outflows from the country decrease, people do not leave at this time, and imports are also slow.
So far, inflows have been normal, similar to the previous Ramazan, but could be 15-20 percent higher due to Zakat and charity inflows, he mentioned, but couldn’t explain why local banks were running out of the Pakistani Rupee.
It bears mentioning that banks can earn hefty margins by investing in government bonds for three months. Meanwhile, the state machinery is eager to borrow as much as it can. During the first nine months of the current fiscal year, it borrowed more than Rs. 2 trillion from banks alone.
Traders are of the view that the open market for foreign exchange is in surplus and that millions of dollars are being deposited in banks. Regardless, the supply of cash from banks is either delayed or not available when needed. Banking customers are irritated due to the prevalent issue and are bracing for it to sustain beyond the Eid holidays.
Via Dawn
