SBP regulation forces Pakistani banks to remove monthly fee on large deposits
Commercial banks have withdrawn the recently announced monthly fee on deposits exceeding Rs 5 billion after the State Bank of Pakistan (SBP) revised Minimum Deposit Rate (MDR) regulations on Tuesday.
Major banks, including Bank Alfalah
and Meezan Bank, have informed their customers of the change, with notices also
shared on their social media platforms. According to Topline Securities, “Banks
have now reversed the hefty monthly fees on large end-of-month balances
following SBP’s relief on the minimum deposit rate.”
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The proposed fees, which were set to
exceed 5% on deposits above Rs 5 billion, had not yet taken effect.
As of June 2024, only 326 domestic
accounts held deposits over Rs 5 billion, with just one belonging to an
individual at Rs 8.17 billion. Financial consultant Mir Nejib Rahman noted that
such large sums are rarely held in bank accounts, as they are typically
invested in mutual funds, real estate, or other avenues.
“For individuals, this change won’t
have a significant impact,” Rahman explained. “Large sums can easily be split
across multiple banks to avoid fees. However, private businesses and government
entities may still face financial costs if they maintain large deposits with
banks that imposed the fees.”
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The new SBP regulations also allow
banks to negotiate returns with institutional depositors. While the direct fee
has been removed, banks will still aim to boost their Advance-to-Deposit Ratio
(ADR) through alternative strategies.
Source: Profit Pakistan