KARACHI: The deposits of banking system have increased to all time high at Rs13.46 trillion in May 2019. However, the record deposits are at risk as the government planned to create Treasury Single Account (TSA) in the latest budget.
The deposits of the banking system have increased by 9.8 percent to Rs13.459 trillion by May 2019 as compared with Rs12.258 trillion with the deposit level on the same month a year ago, according to State Bank of Pakistan (SBP).
Previously, the deposits of banking system had increased to the highest level at Rs13.456 trillion in March 2019.
In the budget 2019/2020, the government announced to establish treasury single account for the government exposure.
Industry source said that the initiatives of TSA would have negative repercussions on the banking deposits.
The has drafted a proposal to introduce TSA to transfer its deposits that are currently being maintained with commercial banks, to SBP.
In this regard, SBP recently held a meeting with bank representatives to brief them about the proposed mechanism of TSA.
Analysts at Topline Securities said that it would be a negative development for banks in terms of systematic risk as total government deposits with commercial banks are around Rs1.9 trillion or 13.7 percent of total deposits, around which, Rs0.9 trillion are of the federal government.
Bank of Khyber (BOP) has the highest government deposits (Federal & Provincial) of 63 percent of its total deposits, followed by Bank of Punjab (BOP) 56 percent, Askari Bank (AKBL) 33 percent and National Bank of Pakistan (NBP) 29 percent.
The analyst said that in the first phase, federal government deposits (around Rs0.9 trillion) will be transferred to SBP under single account, which may be followed by transfer of provincial deposits (around Rs1 trillion).