KARACHI: The deposits of salaried persons in the domestic banking system surged by 35 percent in August 2020 as financial institutions provided safe avenue for investment.
The banking deposits of salaried persons increased to Rs2.252 trillion by end of August 2020 as compared with Rs1.671 trillion in the same month of the last year, according to data released by State Bank of Pakistan (SBP) on Tuesday.
Banking experts said that in the past the interest rates were very high which enabled banks to offer attractive rate of return to depositors.
The central bank kept the policy at higher rate of 13.25 percent till March 2020. However, in the wake of economic slowdown after COVID-19, the SBP significantly reduced the policy rate starting from March 2020.
In the monetary policy announcement on June 25, 2020, the SBP brought down the key policy rate to 7 percent, which is still applicable to date.
The decision brought the cumulative reduction in the policy rate since mid-March to 625 basis points, the SBP said in its policy statement.
It is important to note that the deposits of the banking system reached to a record high of Rs16.327 billion by August 2020.
The categorization of deposits showed personal deposits registered 18.53 percent growth to Rs8.051 trillion in August 2020 as compared with Rs6.792 trillion in the same month of the last year.
The deposits of salaried persons are part of the category of personal deposits.
The other components of this category i.e. deposits of self employed registered 12 percent increase to Rs3.376 trillion in August 2020 as compared with Rs3.012 trillion in the same month of the last year.
Meanwhile, the deposits of other personal accounts registered 15 percent growth to Rs2.423 billion as compared with Rs2.108 billion in the same month of the last year.