Karachi, September 22, 2025 – Commercial banks in Pakistan have experienced a sharp outflow of deposits, as more than Rs1 trillion was withdrawn by customers during July and August, the first two months of the current fiscal year 2025-26.
According to fresh data released by the State Bank of Pakistan (SBP), the banking sector witnessed withdrawals of Rs1.035 trillion. This brought the total deposits down to Rs34.46 trillion by the end of August 2025, compared with Rs35.50 trillion recorded on June 30, 2025.
Interestingly, banks had reported the highest ever deposit level at the close of the previous fiscal year 2024-25. The sudden outflow, therefore, has raised concerns among both regulators and analysts.
Experts explained that the withdrawals were driven by two main reasons: a sharp fall in interest rates and new tax measures announced in the federal budget. The SBP recently cut the key policy rate to 11%, down from last year’s peak of 22%. With lower returns on deposits, many investors are now shifting their money to other options such as the stock market and gold.
At the same time, the government has introduced tougher tax enforcement policies. The Federal Board of Revenue (FBR) has already begun steps to bring more people into the tax net, which may include freezing accounts of non-filers. These developments have increased uncertainty for banks and pushed customers to explore safer or more profitable alternatives.