Karachi, July 13, 2023 – The deposits in commercial banks have soared to a record high of Rs25.51 trillion by the end of June 2023, driven by the prevailing highest interest rate in the country.
Data released by the State Bank of Pakistan (SBP) reveals that bank deposits witnessed a notable 12 percent increase, surging from Rs22.81 trillion in June 2022 to the unprecedented level of Rs25.51 trillion by the end of June 2023.
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Market analysts attribute this surge in bank deposits to the attractive interest rates offered by the banks. The announcement by the SBP on June 26, 2023, to raise the benchmark interest rate to 22 percent, the highest ever recorded, played a significant role in attracting more deposits.
The upward trend in bank deposits continued throughout the month of June 2023. Comparing the figures, bank deposits also grew by 4.6 percent, rising from Rs24.39 trillion at the end of May 2023 to Rs25.51 trillion by June 30, 2023.
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The surge in bank deposits signifies the growing confidence of individuals and businesses in the banking sector, particularly due to the lucrative interest rates being offered. As the interest rates soared to unprecedented levels, savers and investors found it more appealing to deposit their funds in banks, where they can earn higher returns.
This record-breaking milestone in bank deposits reflects positively on the overall economic outlook of Pakistan. Increased deposits provide banks with more liquidity to extend credit facilities, thus facilitating economic growth and development.
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However, it is important to note that high interest rates, although attracting deposits, can also have potential implications for borrowing and investment. The subsequent increase in the cost of borrowing may impact businesses and individuals seeking loans for various purposes, such as expanding operations or making significant investments.
As the country moves forward, policymakers and the central bank will need to strike a delicate balance between maintaining attractive interest rates to encourage savings and managing borrowing costs to facilitate investment and economic expansion.
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The record high bank deposits demonstrate the resilience of the banking sector and the confidence of depositors in Pakistan’s economy. With prudent management and continued focus on economic stability, the country is well-positioned to leverage this financial strength for sustainable growth and prosperity.
