Bank deposits reach record high of Rs26.1 trillion amidst highest interest rate
By News Desk
September 13, 2023 06:44 PM
The deposits in commercial banks have soared to a record high of Rs26.1 trillion by the end of August 2023, driven by the prevailing highest interest rate in the country, reported the 24NewsHD TV channel.
According to the data updated by the State Bank of Pakistan (SBP), the deposits in the banking industry increased by Rs. 3.95 trillion or 18 percent compared to Rs. 22.15 trillion in the same period last year. Compared to Rs. 25.7 trillion in July 2023, bank deposits have increased by 1.6 percent or Rs. 408 billion in August.
In August, bank advances grew by 8 percent to Rs. 11.8 trillion while investments increased by 21 percent to Rs. 22 trillion.
The investment-to-deposit ratio (IDR) of banks grew to 84.3 percent in August, up from 82.1 percent the previous year.
However, the banks’ advance-to-deposit ratio declined to 45.1 percent during the period in review.
Banks’ preference for IDR stems from the low demand for private sector financing amid challenging macroeconomic conditions caused by the central bank’s tight monetary policy.
Notably, SBP is strongly expected to raise the policy rate by at least 200 basis points to 24 percent after the regulator’s latest auction of Treasury Bills (T-Bills) last week which saw the government raise Rs. 1.3 trillion domestic debt at extortionate rates of up to 25.06 percent.
The Monetary Policy Committee will meet tomorrow, September 14, 2023, to decide whether to increase interest rates or not.