Bank de­posits amount to Rs9.4 tril­lion, up 11.9pc

The Pak Banker - - FRONT PAGE - Staff Reporter

De­posits in the bank­ing sys­tem amounted to Rs9.4 tril­lion at the end of 2015, up 11.9% from the be­gin­ning of the year. Ac­cord­ing to the lat­est data re­leased by the State Bank of Pak­istan (SBP), the year-on-year rise in de­posits in 2015 was slightly higher than the in­crease in the pre­ced­ing cal­en­dar year. An­a­lysts say the rise in de­posits oc­curred be­cause of an in­crease in the cur­rency in cir­cu­la­tion last year. "We at­tribute this to higher broad money (M2) growth in 2015, which clocked up at 11% ver­sus 10% in 2014," said Topline Se­cu­ri­ties re­search an­a­lyst Umair Naseer. The av­er­age growth in M2, which in­cludes cur­rency in cir­cu­la­tion as well as to­tal de­mand and time de­posits, has been 13% an­nu­ally for the last five years.

Many ob­servers ex­pected the de­posit base to shrink at the out­set of the cur­rent fis­cal year in July 2015. Their con­cerns were based on the neg­a­tive im­pact of the im­po­si­tion of a with­hold­ing tax on cash with­drawals aimed at in­creas­ing the num­ber of in­come tax re­turn fil­ers.

The govern­ment had ini­tially im­posed a 0.6% tax on ev­ery cash with­drawal of more than Rs50,000 a day by a non-filer of in­come tax re­turn. The with­hold­ing tax is still ef­fec­tive, al­though its rate has been re­duced to 0.3% un­til the end of the cur­rent month.

The break­down of the to­tal de­posits shows per­sonal de­posits grew faster than the over­all de­posit base in 2015. Per­sonal de­posits amounted to Rs4.7 tril­lion at the end of De­cem­ber, up 13.7% from a year ago.

Within the per­sonal de­posits, SBP data shows de­posits main­tained by salaried peo­ple grew 18.5% while those of self-em­ployed peo­ple rose 10.9% year on year. As for loans ex­tended to the pri­vate sec­tor, SBP data for the first 11 months of 2015 shows they amounted to Rs3.4 tril­lion, up 5.4% from the out­stand­ing po­si­tion at the end of Novem­ber 2014. An­a­lysts be­lieve the in­crease in loans ex­tended to the pri­vate sec­tor last year was less than suf­fi­cient.

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