Bank deposits grow 20pc and the future ahead.

Byline: S. Kamal Hayder Kazmi

The studies identified that countries should strive to promote a wider use of bank deposits not only to aid economic development and poverty alleviation but good to complement the mainstream macro prudential strategies to improve financial stability in a country. Moreover, banks have always played a significant position in any country's economy.

The experts also identified that they play a decisive role in the development of the industry and even trade. They are acting not only as the custodian of the wealth of the country but also as resources of the country, which are essential for the economic development of a nation. The general role of commercial banks is to offer financial services to general public and business, ensuring economic and social stability and sustainable growth of the economy.

Position at the end of the month) (Million Rupees)

Description###Aug-20###Sep-2020P

1. Non Resident Deposits###334,392###324,331

2. Resident Deposits###15,713,399###16,160,445

1. Government (Including govt. trusts, NGOs, and

   Corporate bodies)###2,374,370###2,365,870

2. Non-Financial Public Sector Enterprises (NFPSE)###1,121,086###1,088,122

3. Non-Bank Financial Institutions (NBFIs)###398,379###602,108

4. Private Sector (Business)###3,317,456###3,468,630

5. Trust Funds and Non Profit Organizations###409,175###412,867

6. Personal###8,051,330###8,184,328

7. Other###41,603###38,520

   Total###16,047,791###16,484,777

   In the developing countries like Pakistan, the experts view that banks have mainly utilized the deposits to meet financing needs of the Government of Pakistan as the private sector remains reluctant to borrow for business expansion or organizing new ventures especially under the current Covid-19 pandemic situation.

   Present statistics showed that the bank deposits rose 20 percent over a year and stood at Rs16.66 trillion in October 2020. Such deposits had amounted to Rs13.91 trillion a year ago in October last year. Furthermore, key sources of higher deposit growth are increased in money supply (17 percent year-on-year basis) and the growth in bank deposits of individual account holders.

   The bank deposits have been mostly utilised to finance Government of Pakistan's projects as it declines short of required funds for development and non-development projects from its own resources because of low tax collection. No doubt, banks mainly lend to the state by investment in government securities like T-Bills (Treasury bills) and...