KARACHI: Total deposits of scheduled banks shot up by a five-year high rate of nine per cent in the nine months through September.
But on a quarter-on-quarter basis, the deposits fell by 1pc to Rs9.1 trillion due to negative impact of withholding tax on bank transactions.
A research report of Topline Securities issued on Thursday said the 9pc growth in January-September is larger than the last five-year average of 5pc and last year’s 7pc.
In September 2015, the deposits grew by 13pc year-on-year, in line with last year’s growth of 13pc.
“However, bankers are of the view that imposition of withholding tax in the budget FY16 on banking transactions had a slightly negative impact on deposits. The sector saw some deposits withdrawals from banks. Had the tax not been imposed, deposits would have registered a quarter-on-quarter growth,” said the report.
The government imposed a withholding tax of 0.6pc on all banking transaction of over Rs50,000 in a day for non-filers of tax returns. Later on, the government reduced the rate to 0.3pc till November 2015, allowing traders to file tax returns in the given time.
Despite improving macros and interest rates at multi-decade low, advances growth remained lower than expected. Energy crisis, dampened aggregate demand and impact of falling output prices for industries like textiles have slowed credit growth.