In a positive economic development, Pakistani banks deposits increased to Rs 17 trillion

In a positive economic development, Pakistani banks deposits increased to Rs 17 trillion

Bank deposits have increased to Rs. 17.1 trillion in January 2021, up by 16.40 percent from Rs. 14.7 trillion in the same month last year, according to the data released by the State Bank of Pakistan (SBP).

On a monthly comparison, however, deposits fell by 4.4 percent. They were at Rs. 17.8 trillion in December 2020.

The year-over-year improvement in the banking sector deposits is being attributed to higher growth in workers’ remittances coupled with lower investment in National Savings Schemes (NSS).

The increase in remittances from overseas Pakistani workers (in dollar terms) may have translated into higher growth in personal deposits.

The institutional ban on NSS investment since July 2020, along with additional scrutiny measures, could also have resulted in investment in NSS and prize bonds, which would also explain this yearly increase in deposits. ------------------------------

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At the same time, about the monthly decline experts believe that this increasing trend is also indicative of the strong liquidity position of private businesses, despite the downward pressures of the coronavirus pandemic. Lockdown impacts have also started to fade and economic activity is now picking up.

The sluggish investment by the firms in earlier months pushed the deposits of private sector businesses higher, and now as the investments grow again, the deposits have gone down month-over-month.

The SBP’s data also showed that bank advances grew 3.7 percent to Rs. 8.5 trillion in January 2021. Investments depicted a jump of 37 percent to Rs. 11.4 trillion in the same period.

The advance to deposit ratio fell to 50 percent in January from 56 percent a year ago. The investment to deposit ratio rose to 67 percent in January from 57 percent in the same month of last year.

Experts predict deposit growth to remain in the range of 12 to 14 percent in 2021, while advances will likely grow around 4 to 6 percent.