Pakistan’s banking system experienced a significant dip in deposits, with a massive withdrawal of approximately Rs711 billion in July 2019, following a record high in bank deposits by the end of June 2019.
According to data released by the State Bank of Pakistan (SBP), the total deposits in the banking system stood at Rs13,747 billion by the end of July 2019, a sharp decline from the record level of Rs14,458 billion at the close of June 2019. The decrease in deposits signals a major shift in the banking landscape, attributed to several factors that took place during this period.
Sources within the banking sector revealed that banks had made significant efforts to boost their deposit figures by June 30, 2019. These efforts were aimed at improving the presentation of their financial books for the close of the fiscal year, showcasing higher liquidity and deposits. It was noted that many banks worked to ensure their balance sheets reflected substantial deposits in order to maintain investor confidence and meet financial targets.
The massive withdrawal of funds during July was primarily linked to Eid-related expenses and increased investment in business activities. The festive season saw a surge in consumer spending, while businesses also increased investments for the upcoming fiscal period. This led to a temporary but sharp outflow of funds from bank accounts, reflecting the seasonal fluctuations in the financial system.
Additionally, the banking industry experienced record deposits of Rs14,458 billion by the end of June 2019 due to a combination of factors. One of the significant drivers was the amnesty scheme in effect during that month, which encouraged individuals to declare their hidden wealth. Those wishing to take advantage of the scheme were required to deposit money into their bank accounts, further boosting the deposit figures for that period.
Despite the high deposits seen in June, the withdrawal trend in July highlights the volatility in the banking system, with funds often shifting for business purposes or seasonal expenditure. As a result, Pakistan’s banking sector continues to face challenges in maintaining consistent deposit levels, even as efforts to stimulate growth and attract new deposits continue.
Looking ahead, the banking sector will likely need to implement further strategies to ensure stability in deposit trends and strengthen liquidity throughout the fiscal year.