Bank deposits in Pakistan soar to Rs25.6 trillion by close
of June 2023
Bank deposits in Pakistan set a new record, reaching Rs25.6
trillion by the close of June 2023, according to the annual statement released
by the Deposit Protection Corporation (DPC) on Friday.
The report revealed a substantial net increase of Rs1.8
trillion in eligible deposits for protection under the DPC scheme, totaling
Rs14 trillion. These protected deposits accounted for 55 percent of the overall
bank deposits as of June 2023.
Pakistan's
salaried class boosts bank deposits to Rs3.45 trillion
Despite this impressive surge, the report highlighted a
year-on-year slowdown in deposit mobilization for the fiscal year 2023 compared
to the previous fiscal year. The DPC, a subsidiary of the State Bank of
Pakistan (SBP) responsible for providing deposit insurance, disclosed that
deposit growth decelerated to 12 percent, down from 15 percent in the preceding
year.
As of June 30, the report indicated that 98.9 percent of
total depositors in conventional banking and 98.7 percent in Islamic banking
are eligible for deposit protection in the event of a bank failure. In terms of
value, 52 percent of conventional banking and 63 percent of Islamic banking
deposits are eligible for deposit protection.
Pakistan’s
banking deposits register growth of 7.1% on a year-on-year basis
Factors contributing to the increase in total deposits were
attributed to a higher rate of return resulting from a tighter monetary policy
stance and the expansion of banks' branch networks. However, the report
suggested that macroeconomic uncertainty, including inflationary pressures, and
a slowdown in the inflow of foreign remittances by the Pakistani Diaspora might
have contributed to the deceleration in deposit growth.
The annual report covered various aspects of the financial
sector, highlighting the winding-down plan approved by the federal government
for the SME Bank due to insufficient capital and liquidity.
The State Bank of Pakistan proposed a plan to ensure that
depositors are not adversely affected by the bank’s closure. Payouts to all SME
Bank depositors were initiated based on the SBP’s proposed plan, aiming to
maintain confidence in the banking system.
Bank
deposits surge to Rs26.11 trillion in August, marking an 18% Increase
The report emphasized that efficient and well-functioning
deposit insurance, such as that provided by the DPC, serves as a crucial
financial safety net in the event of a small bank failure, alleviating distress
for depositors.
Source: Profit Pakistan