Total outstanding deposits in the banking system in the country surged to Rs9.2 trillion at the end of January, up 10.8% from the end of the first month of 2015.
According to data released by the State Bank of Pakistan (SBP), the year-on-year increase of almost Rs900 billion in total deposits was largely fuelled by the surge in personal deposits.
Personal deposits rose 12.1% over the preceding 12 months to clock up at Rs4.7 trillion at the end of January. Personal deposits accounted for almost 51% of total deposits at the end of the first month of 2016. In contrast, their share in total deposits stood at 50.3% one year ago, SBP data shows.
Within the personal deposits category, deposits maintained by salaried people grew 18.4% while those of self-employed people rose 7.1% year on year, according to SBP data.
Interestingly, personal deposits under the category of “other personal: housewives, students etc.” far exceeded the amount held by salaried people. With the year-on-year increase of 15.8%, deposits maintained by “housewives and students etc.” amounted to Rs1.4 trillion at the end of January.
As for deposits held by the private sector, SBP data for the first month of 2016 shows they amounted to Rs2.3 trillion, up a meagre 3.4% from the outstanding position at the end of January 2015. Within private-sector businesses, deposits maintained by the manufacturing sector rose 9.9% year on year to Rs637.3 billion at the end of January.
Deposits held by private trusts and non-profit organisations amounted to Rs142 billion after going up by 19.3% over the preceding 12 months, SBP data shows. Deposits grew by 11.9% last year, which was slightly higher than the increase in the preceding calendar year. Analysts believe the rise in deposits occurred because of an increase in the currency in circulation. Broad money (M2) growth in 2015 was 11% as opposed to 10% in the preceding year.
The increase in the deposit base was surprising in the wake of a withholding tax on cash withdrawals imposed in July last year. Initially imposed at 0.6% but later reduced to 0.3%, the withholding tax was applicable to every cash withdrawal of more than Rs50,000 in a single day by a non-filer of income tax return.
