Around Rs 16.2 trillion were the bank deposits on June 30, 2020, whereas, the deposits reached the height of Rs 19.8 trillion on the same date, a year later. Government deposits, private deposits, and household deposits with the bank in the country increased by 22 percent in fiscal year 2020-21. This is the highest amount of deposits in the 14-year history of Pakistan.
Ahmad Siddiqui, the Meezan Bank Head of Product development and Shariah Compliance Senior Vice President told, “A pickup in migration of financial transaction to the digital amount of deposits in one year of the pandemic also helped keep a significant amount of deposits in the banking system, meaning transactions took place but the money did not go out of the banking system technically.”
Meanwhile, Tahir Abbas, Arif Habib Head of Research said, “Acceleration in economic activities directly support growth as businesses and people earn more.”
During the fiscal year 2019-20, the rate of GDP was -0.5 percent due to the lethal condition of Covid-19 but the fiscal year 2020-21 witnessed big economic growth when the rate of GDP touched the level of around 4 percent. During the current financial year, the government has targeted to achieve the 4.8 percent of the GDP.
Topline research comments, growth in deposits came due to higher worker remittances (Which soared 27% to a record-high $29.4 billion, equivalent to around Rs 4.6 trillion, in FY21). The Pakistani labor force, working abroad, send their remittances to their family members back home usually through banks which are in fact the deposits of banks. If the recipients spend the remittances, they remain a part of the national economy.
Moreover, the government’s borrowing from the commercial banks to cover the budget deficit, shift to digital banking from conventional banking, and excessive money printing all supported the increase in deposits.