ISLAMABAD: The Federal Board of Revenue (FBR) has earned Rs87 billion in income tax from bank depositors during the first ten months of the fiscal year 2023-24.
This figure represents a substantial increase from the Rs71 billion amassed during the same period in the previous fiscal year, marking a 22 percent growth.
Sources within the FBR have attributed this remarkable surge in tax revenue to the unprecedented level of bank deposits within the country’s financial system. These record-breaking deposits have been fueled by the higher interest rates prevailing in Pakistan, which have made bank savings increasingly attractive to depositors.
By the end of April 2024, bank deposits in Pakistan had soared to an unprecedented Rs28.42 trillion, up from Rs28.32 trillion recorded in March 2024. This growth signifies a robust expansion within the banking sector, underpinned by the confidence of depositors and the strategic monetary policies of the State Bank of Pakistan (SBP).
The SBP reported that bank deposits for April 2024 exhibited a substantial year-on-year growth of 21.3 percent, rising from Rs 23.43 trillion in April 2023. This impressive surge underscores the increasing trust of depositors in the banking system, buoyed by a favorable economic environment and high-interest rates.
Financial market experts have linked this remarkable increase in bank deposits to the high-interest rate policy maintained by the central bank. The SBP has consistently upheld a key policy rate of 22 percent over the past several monetary policy reviews. This high-interest rate environment has been pivotal in drawing depositors seeking lucrative returns on their savings.
“At a 22 percent interest rate, depositors find the returns on their investments quite attractive,” remarked a market analyst. “This scenario has encouraged people to deposit more money in banks, rather than exploring other investment avenues.”
The surge in bank deposits and the corresponding rise in income tax revenue from depositors reflect a broader trend of increasing financial stability and depositor confidence in Pakistan’s banking system. This fiscal development not only underscores the effectiveness of the SBP’s monetary policies but also highlights the critical role of the banking sector in supporting the country’s economic growth.
