Banks trans­ac­tions, de­posits de­clin­ing

The Pak Banker - - FRONT PAGE - Muham­mad Yasir

Com­mer­cial banks have started feel­ing the heat of with­hold­ing tax of 0.3 per­cent on the trans­ac­tion of more than Rs 50,000 as their cus­tomers are rapidly switch­ing to var­i­ous al­ter­nate ways of money trans­fer for busi­ness and per­sonal needs de­pict­ing de­cline in banks de­posits.

Ac­cord­ing to the cen­tral bank, the banks de­posits has de­creased by Rs 34.215 bil­lion in July which was the first month of the in­tro­duc­tion of tax which was ear­lier de­ducted at 0.6 per­cent from non-filer.

The over­all de­posits of sched­uled bank de­creased to Rs 9.106 tril­lion in July as com­pared to Rs 9.141 tril­lion in June. This de­cline was re­ported af­ter seven month since De­cem­ber 2014 as over­all value con­tin­ued to in­crease dur­ing this pe­riod.

On the other hand, bankers said banks cus­tomers from cat­e­gories of in­di­vid­ual, group cor­po­rate and SMEs have de­creased the use of trans­fer of money within the bank­ing chan­nel im­pact­ing their de­cline of the de­posits.

They said the var­i­ous groups have started Hawala and Hundi within the sphere of dif­fer­ent cities to con­tinue their trad­ing while avoid­ing with­hold­ing tax at their level best.

These Hawala and Hundi trans­ac­tions are nor­mally done through "Parchi" sys­tem in which a guar­an­tor charge min­i­mal amount and meets fi­nan­cial trans­ac­tion from their own pocket. Fur­ther­more, de­pos­i­tors hav­ing sav­ings in bank ac­counts are now con­vert­ing their in­vest­ment from Ru­pees to Dol­lars but avoid­ing any cur­rency in ac­count from pre­vent­ing them­selves cut­ting tax. This will also spike de­mand of Dol­lars in in­ter­bank mar­ket de­pre­ci­at­ing Ru­pees value against Dol­lar at 104.

Small traders rep­re­sen­ta­tive said traders are with­draw­ing their money from banks whereas avoid­ing de­posit­ing in their ac­count to do busi­ness. This trans­ac­tion was done within the cities and com­mer­cial ar­eas in dif­fer­ent sec­tors as the new sys­tem is get­ting emerged very rapidly in par­al­lel with bank­ing sys­tem.

They have started cam­paign to weaken bank­ing sys­tem to force gov­ern­ment with­draw this tax, hence the out­flow of Rs 200 bil­lion were made from banks so far.

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