Bank deposits touch Rs 9.4tr
Pakistan's banking industry deposits continue to grow as it surged to Rs 9.408 trillion, showing an increase in liquidity of commercial banks and deposits of banking customers of various sectors. According to the State Bank of Pakistan (SBP), the deposits of all banks grew to Rs 9.408 trillion in January 2016 compared to Rs 9.305 trillion recorded in December 2015.
The growth in deposits witnessed that money is coming to banking system after its seasonal outflows to the different sector of the economy hence the deposits started showing growth in the banking industry.
Riaz Riazuddin, Deputy Governor of State Bank of Pakistan (SBP) explained about banking deposits growth saying the seasonal outflow witness every year after September since a deposits are withdrawn for investment in agriculture and different sector.
Hence the deposits of banks decreased for three to four months which returns to banking systems from mid of November, and continued to increase till July, he added while speaking on the occasion of recen announcement meeting of monetary policy.
Riaz said the impact of withholding tax on the banks deposits could not be ruled out but it has not hurt overall banking industry deposits and dynamics.
Investments registered strong growth to reach Rs6.81 trillion in January as banks continued to invest in risk-free government securities. The investment number stood at Rs 6.72 trillion in the month of December 2015.
There are strong expectations for bullish advances growth owing to strong prospects from the initiation of China-Pakistan Economic Corridor (CPEC), which started reflecting in the industry as banks advances grew to Rs 4.84 tril- lion in January 2016 as compared to Rs 4.78 trillion recorded in December 2015. According to Ministry of Water & Power, out of the total US$46billion, US$28 billion projects are to be completed by 2018, which may involve financing of power and infrastructure projects by Chinese and local banks. This coupled with other planned power sector projects are likely to trigger higher advance growth going ahead.
Banking sector analysts suggested that these projects will generate an additional credit demand of US$2 billion annually during the next 3-years, which is equivalent to 5% of the total advances of the industry.