Over Rs. 1 Trillion Pulled Out of Pakistani Banks in Just 2 Months

Pakistan’s commercial banks lost more than Rs. 1 trillion in deposits during the first two months of fiscal year 2025-26, raising fresh concerns as customers seek alternative investment options. Data released by the State Bank of Pakistan showed withdrawals of Rs. 1.035 trillion in July and August, pulling total deposits down to Rs. 34.46 trillion at the end of August from a record Rs. 35.49 trillion on June 30, 2025. The sharp reversal came just weeks after banks posted their highest-ever deposit levels at the close of FY25. Analysts linked the outflow to two main factors: a steep fall in interest rates and new tax enforcement measures. The central bank has cut its policy rate to 11%, compared with last year’s peak of 22%, leaving depositors with lower returns. Many are moving funds into the stock market, gold, and other higher-yielding assets. At the same time, the government has stepped up efforts to widen the tax base. The Federal Board of Revenue has warned of stricter measures, including potential account freezes for non-filers, prompting depositors to reconsider holding large balances in banks.