Pakistani banks saw a significant outflow of funds, with over 1 Trillion rupees withdrawn during July and August of fiscal year 2025-26. The total deposits fell to Rs 34.46 trillion by the end of August from a record Rs 35.49 trillion on June 30.
The sharp decline comes shortly after banks reported their highest-ever deposits at the close of FY25. Analysts say two main factors drove the withdrawals: lower interest rates and stricter tax measures.
The State Bank of Pakistan reduced the policy rate to 11%, down from 22% last year. This decrease in returns prompted depositors to move money into higher-yielding options such as the stock market, gold, and other investments.
At the same time, the Federal Board of Revenue intensified efforts to widen the tax base. Non-filers face warnings, including potential account freezes. Many depositors withdrew funds from banks to avoid complications, contributing to the 1 Trillion rupee outflow.
The sudden reversal raises concerns about liquidity in the banking system. Experts warn that such large withdrawals could impact lending capacity and overall economic confidence. Banks are now exploring ways to retain depositors by offering better investment opportunities.
Financial authorities are monitoring the situation closely to ensure stability in the sector. They are urging depositors to remain informed about safe banking options while complying with tax regulations.
The combined effect of low interest rates and strict tax enforcement is likely to continue influencing deposit trends. Analysts expect that more withdrawals may occur if returns on bank deposits remain unattractive compared to other investment avenues.
The 1 Trillion rupee outflow highlights the need for balanced policies that encourage savings while maintaining financial stability in Pakistan’s banking sector.
In other related news also read AGP Detects Rs243 Billion Irregularities In State Bank Of Pakistan
