Bank deposits hit record high of Rs17.96 trillion in May

The deposits of the banking system have increased to a record high of Rs17.96 trillion by the end of May, owing to the stalled economic activities following a rise in coronavirus cases during the past couple of months.

Previously, the banking deposits witnessed a record high of Rs17.90 trillion in March 2021, according to the statistics released by the State SBP on Thursday.

The deposits of the banking system increased 18 percent in May 2021, compared with Rs15.48 trillion in the same month of the last year. Similarly, the deposits also increased 2.8 percent in May 2021, compared with Rs17.56 trillion in April 2021.

Industry experts attributed the record high of banking deposits to a surge in the cases of coronavirus during April and May 2021, which created fear of strict lockdown.

However, they expressed the hope that the economic activities would accelerate, as the Covid cases were falling in the current month and several restrictions related to the pandemic had been eased.

With the ease in the acceleration in the economic activities cash from the banking system would be withdrawn, they said, adding that the banking system would get more deposits due to the latest measures taken in the Federal Budget 2021/22.

Through the Finance Bill, 2021, several taxation incentives had been granted, which included removal of withholding tax on cash withdrawal, non-cash banking transactions, and tax deduction on the payments made through debit and credit cards.

All these withholding taxes have been withdrawn that were imposed on the customers of the banking system to encourage them to file their annual income tax returns. The experts believed such measures would further help the banking system improve its deposit base in the coming months.