Since the State Bank of Pakistan recently increased its policy rate, the minimum deposit rate (MRD) or profit rate offered to consumers by various commercial banks soared to an all-time high level of 18.5 percent (SBP).
The new deposit rate went into effect the day after the new monetary policy was announced. From April 1st onward, banks will apply this rate to deposits made in March 2023.
Customers and investors who would receive up to Rs. 18,500 on an investment of Rs. 100,000 excluding various taxes and duties are drawn in by the rising profit rates offered by banks on savings accounts and term finance certificates, which also attracts significant deposits from customers and investors.
In comparison to Islamic banks, conventional banks provide higher deposit profit rates.
Due to MDR, which increases client profit rates, the banking industry’s overall deposits have been rising. Over Rs. 22.75 trillion worth of deposits were made in the banking sector as a whole, which is the greatest amount ever. The number of savings and investment products offered by various financial organisations, such as mutual funds and National Savings, increased in addition to savings accounts and investment certificates.
Pakistan’s savings-to-GDP ratio, which is often about 10%, is lower than that of other nations in the region. High rates of personal and institutional saving have unique advantages for the economy. To do this, banks must provide clients with attractive profit margins.