Karachi, August 9, 2023 – Deposits in commercial banks in Pakistan have reached an all-time high of Rs25.70 trillion by the end of July 2023, driven by the country’s highest interest rates.
Data released by the State Bank of Pakistan (SBP) on Wednesday showed a significant increase of 16.29 percent in bank deposits, rising from Rs22.10 trillion in July 2022 to the unprecedented level of Rs25.70 trillion by the end of June 2023.
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Experts believe that the attractive interest rates offered by banks are behind this surge in deposits. The SBP’s announcement on June 26, 2023, to raise the benchmark interest rate to a historic 22 percent played a major role in attracting more deposits.
The upward trend in bank deposits continued throughout June 2023. Comparing the figures, deposits grew by 0.75 percent, rising from Rs25.51 trillion at the end of June 2023 to Rs25.70 trillion by July 30, 2023.
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This increase in bank deposits reflects growing confidence in the banking sector among individuals and businesses, mainly due to the appealing interest rates offered. With interest rates at unprecedented levels, savers and investors found it more attractive to deposit their money in banks to earn higher returns.
The milestone of record-breaking bank deposits has positive implications for Pakistan’s overall economic outlook. Higher deposits provide banks with more funds to offer credit facilities, supporting economic growth and development.
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However, it’s important to note that while high interest rates attract deposits, they can also impact borrowing and investment. The subsequent rise in borrowing costs might affect businesses and individuals seeking loans for expansion or significant investments.
As the country moves forward, policymakers and the central bank will need to find a balance between maintaining attractive interest rates to encourage saving and managing borrowing costs to facilitate investment and economic growth.
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The record-breaking bank deposits showcase the resilience of Pakistan’s banking sector and the trust depositors have in the economy. With careful management and continued focus on economic stability, the nation is well-equipped to use this financial strength for sustainable growth and prosperity.