The amnesty scheme ended on July 3, 2019 and at the end of it, Pakistan had raised PKR 70 billion from taxation revenues, total of 130,000 people had declared their assets worth PKR 3 trillion and bank deposits surged by almost PKR 1 trillion or 7.43% of the total bank deposits.
The deposits had been PKR 13.46 trillion at the end of May, 2019 and increased to PKR 14.46 trillion in the month of June. Alpha Beta Core CEO Khurram Shehzad said that, “the jump is clearly related to the amnesty related flows, which include prize bond encashment, real estate and US dollar conversion.”
Experts say that another reason for the deposits could be high interest rates that the banks are offering to customers on fixed deposits. The interest rate was at an eight year high in May 2019 at 12.25%. This enabled the banks to cater for their financing needs through deposits from the general public instead of going for an expensive bank to bank loans.
The higher interest rate on fixed deposits was viewed by many investors as a safer investment opportunity, as compared to investments in gold and stock market.
Earlier the bank deposits grew only 3%, from PKR 13.06 trillion at the end of June 2018 to PKR 13.46 trillion in May, 2019. Experts say that’s because of the increased withholding tax imposed by the government. The withholding tax on transactions above PKR 50,000 was 0.6%.
This encouraged many non-filers to keep their money out of the banks, which makes up over 90% of the total deposits in the bank, and hence, this grew the black economy of the country.
In the recent amnesty scheme, many non-filers declared their assets on lower taxation rates, ranging from 0.5% to 6% and brought almost PKR 3 trillion worth of assets in the network.
Bank Islami CEO Syed Amir Ali said that the bank deposits grew at a sluggish pace in May because of the black economy and the government crackdown on Benami account holders to counter money laundering and terror financing.