The State Bank of Pakistan (SBP) has recorded a whopping Rs190 billion increase in personal accounts deposits during the first three months of 2022, reported 24NewsHD TV channel on Friday.
According to the SBP, personal accounts deposits in the banking system have increased from Rs2,640 billion to Rs2,830 billion during January-March 2022.
“The main reason behind the increase in personal accounts deposits is high interest rates and elimination of tax on cash withdrawals,” experts say.
“The increase in personal accounts deposits is extraordinary, for deposits in other individual accounts such as salary and business accounts have remained flat,” they add.
According to the SBP, total deposits of the individual bank accounts reduced to Rs9,417 billion by the end of March 2022, whereas, the same deposits were Rs9,443 billion at the end of December 2021.
“Since the abolition of withholding income tax on cash withdrawals on July 1 last, there has been a gradual increase in deposits in personal accounts,” observe the banking experts.
“After increase in the policy rate, due to better return on investment, personal accounts are increasing,” they add.
“The SBP raised interest rate by 2.75pc to 9.75pc during September-December 2021. The central bank in its policy announcement on April 7, 2022 further raised the interest rate by 2.50pc to 12.25pc which also caused the personal accounts deposits to increase,” they state.
The banking experts also attribute the increase in personal accounts reserves to the change in bearer national prize bonds.
They say that the government began documenting the amount invested in prize bonds. Then, in the first phase, the government withdrew bearer prize bonds of Rs7,500, Rs15,000, Rs25,000 and Rs40,000 and banned the encashment of bearer prize bonds.
It is to be noted here that June 30, 2022 is the deadline for exchanging or replacing bearer prize bonds.
Reporter: Ashraf Khan