Karachi: A significant financial milestone has been achieved, as bank deposits have soared to an unprecedented high of Rs26.398 trillion in October 2023. This remarkable growth of 17.8% is attributed to the prevailing high-interest rates, marking a substantial increase of Rs3.986 trillion compared to the same month in the previous year, according to a report by ARY News.
The State Bank of Pakistan (SBP), acting as the authoritative source on these developments, has indicated that the banking sector is experiencing an unparalleled surge. The SBP spokesperson highlighted the monumental achievement, emphasizing the historic high of Rs3.986 trillion and the overall record of Rs26.398 trillion in bank deposits for October 2023, a substantial rise from the Rs22.412 trillion recorded in October 2022.
Economic analysts delving into the dynamics of this financial upswing point to a key factor: the robust interest rate of 22%. This lucrative interest rate has translated into better returns for investors, fueling the surge in deposits within the banking system.
It's worth noting that this positive trend has emerged amidst challenges for investors, particularly in the aftermath of extensive crackdowns on gold and the US Dollar (USD) aimed at curbing smuggling activities.
Addressing concerns about the stability and safety of the banking system, the central bank, in a statement issued recently, reiterated its commitment to a secure financial environment. The SBP assured the public that the Pakistan banking system remains solid and secure, operating within a robust regulatory and supervisory framework.
Additionally, the SBP highlighted the protective layer provided by insurance coverage, ensuring the safety of all deposits. Furthermore, the SBP emphasized the resilience of the banking sector in Pakistan, highlighting its adequate capitalization, high liquidity, and profitability. The ability of the system to withstand severe shocks has also improved significantly.
Notably, 94% of depositors are fully protected under the Deposit Protection Act 2016, according to the central bank. In response to media reports that raised concerns based on statements made by Deputy Governor SBP, Dr. Inayat Hussain during a meeting of the Senate Standing Committee on Finance and Revenue, the SBP sought to dispel any notion that deposits above Rs500,000 were unsafe.
The central bank categorically stated that the deposits were secure, reiterating the soundness of the banking system in Pakistan. The regulatory and supervisory framework of the SBP, coupled with the sector's strong capitalization and low level of net non-performing loans, ensures the safety and stability of the banking industry in the country.