Karachi, April 18, 2024 – In a historic milestone for Pakistan’s financial landscape, bank deposits have soared to unprecedented levels, surpassing the Rs 28 trillion mark for the first time in history.
Data released by the State Bank of Pakistan (SBP) on Thursday unveiled this remarkable achievement, signaling robust growth and resilience within the country’s banking sector.
According to the SBP, bank deposits surged to an impressive Rs 28.32 trillion by the end of March 2024, marking a substantial increase from Rs 23.58 trillion recorded in the corresponding month of the previous year. This remarkable growth represents a notable 20 percent escalation, underscoring the confidence and trust reposed by the public in the banking system.
Furthermore, the data revealed a month-on-month increase of 1.54 percent, with bank deposits climbing from Rs 27.89 trillion in February 2024 to their current pinnacle. This upward trajectory reflects sustained momentum and robust inflows into the banking sector, driven by various economic factors and policy measures.
One of the primary drivers behind this surge in bank deposits is attributed to the record-high interest rates maintained by the SBP as part of its inflation-containment strategy. With the benchmark key policy rate steadfastly held at 22 percent for several months, the allure of higher returns incentivized individuals and businesses to channel their savings into the banking system.
The prevailing interest rate regime, characterized by its stringent stance, not only bolstered savings but also tempered inflationary pressures. By offering attractive returns on deposits, the banking sector effectively mobilized idle funds, fostering financial inclusion and stability.
However, while high interest rates proved beneficial in stimulating savings, they concurrently posed challenges to the industrial sector by constraining credit off-take for private enterprises. The elevated borrowing costs limited the capacity of businesses to invest in expansion and innovation, thereby impacting overall economic growth.
This latest milestone comes on the heels of a previous record high, with bank deposits in Pakistan reaching Rs 27.84 trillion in December 2023, underscoring the sustained trajectory of growth and resilience exhibited by the banking sector.
As Pakistan’s financial landscape continues to evolve, fueled by robust economic fundamentals and prudent policy measures, the banking sector remains poised to play a pivotal role in driving inclusive growth and prosperity. With bank deposits scaling new heights, the stage is set for further expansion and innovation within the financial ecosystem, laying the foundation for a resilient and prosperous future.
