KARACHI: The bank deposits have witnessed a record high and stood at Rs21 trillion by the end of the calendar year 2021. Experts attributed the massive growth in deposits to a hike in the interest rates by the State Bank of Pakistan.
Previously, the bank deposits reached a historic high of Rs19.83 trillion by September 2021. The central bank increased the key policy rates by 100 basis points to 9.75 per cent in its policy statement announced on December 14, 2021.
It was the second increase in the interest rates in less than a month. The central bank on November 19, 2021 enhanced the rates by 150 basis points. Cumulatively, the SBP increased the key policy rate by 2.75 per cent during the last three consecutive policy announcements.
The deposits of the banking system recorded a growth of 214 per cent during the last decade to Rs21 trillion from Rs6.68 trillion by the end of the year 2012.
The advances of the banking system recorded a 19 percent growth to Rs10.15 trillion in 2021, compared with Rs8.49 trillion in 2020.
Analysts at the Topline Securities said that advances recorded the highest growth after 2018. The investment of the banking system witnessed a growth of 22 per cent to Rs14.12 trillion in 2021, compared with Rs11.55 trillion in 2020.
Earlier last week, the State Bank of Pakistan (SBP) said that banks’ outstanding credit for housing and construction increased from Rs192 billion to Rs355 billion during 2021, showing 85 percent growth.
The SBP in a statement issued on Thursday said that financing to housing and construction and particularly under MPMG has witnessed impressive growth on the back of many enabling regulatory environments introduced after extensive consultation with stakeholders.
Within the housing and construction portfolio, disbursements under the government mark-up subsidy scheme, also known as Mera Pakistan Mera Ghar (MPMG), increased by Rs38 billion, it added.
The statement further said, SBP also advised the banks to increase their housing and construction finance portfolios to at least 5 percent of their domestic private sector advances till December 2021, introducing a set of incentives and penalties to ensure compliance.
In the significant growth of Housing and Construction finance, Habib Bank, Meezan Bank, and Bank Al Habib were the top three contributors. Banks also made significant progress in the provision of financing under the MPMG scheme, introduced in 2020, it added.
The banks have received requests for financing of Rs276 billion from potential customers, which indicates that approvals and disbursements will keep growing in the coming months, the statement said.
Bank Alfalah emerged as the leading bank with the highest disbursement of Rs3.3 billion followed by nine banks with disbursements of over Rs2 billion each.
Key initiatives, it said, include allowing acceptance of third-party guarantees during the construction period, waiver of Debt Burden Ratio (DBR) in case of informal income, and the introduction of standard facilities offered by the banks. The State Bank has also advised banks to develop and deploy income estimation models for borrowers with informal sources of income.
