Karachi: A significant financial milestone has been achieved, as bankdeposits have soared to an unprecedented high of Rs26.398 trillion inOctober 2023. This remarkable growth of 17.8% is attributed to theprevailing high-interest rates, marking a substantial increase of Rs3.986trillion compared to the same month in the previous year, according to areport by ARY News.
The State Bank of Pakistan (SBP), acting as the authoritative source onthese developments, has indicated that the banking sector is experiencingan unparalleled surge. The SBP spokesperson highlighted the monumentalachievement, emphasizing the historic high of Rs3.986 trillion and theoverall record of Rs26.398 trillion in bank deposits for October 2023, asubstantial rise from the Rs22.412 trillion recorded in October 2022.
Economic analysts delving into the dynamics of this financial upswingpoint to a key factor: the robust interest rate of 22%. This lucrativeinterest rate has translated into better returns for investors, fueling thesurge in deposits within the banking system.
It’s worth noting that this positive trend has emerged amidst challengesfor investors, particularly in the aftermath of extensive crackdowns ongold 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 commitmentto a secure financial environment. The SBP assured the public that thePakistan banking system remains solid and secure, operating within a robustregulatory and supervisory framework.
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Additionally, the SBP highlighted the protective layer provided byinsurance coverage, ensuring the safety of all deposits. Furthermore, theSBP emphasized the resilience of the banking sector in Pakistan,highlighting its adequate capitalization, high liquidity, andprofitability. The ability of the system to withstand severe shocks hasalso improved significantly.
Notably, 94% of depositors are fully protected under the Deposit ProtectionAct 2016, according to the central bank. In response to media reports thatraised concerns based on statements made by Deputy Governor SBP, Dr. InayatHussain during a meeting of the Senate Standing Committee on Finance andRevenue, the SBP sought to dispel any notion that deposits above Rs500,000were unsafe.
The central bank categorically stated that the deposits were secure,reiterating the soundness of the banking system in Pakistan. The regulatoryand supervisory framework of the SBP, coupled with the sector’s strongcapitalization and low level of net non-performing loans, ensures thesafety and stability of the banking industry in the country.