March 26, 2021 (MLN): The total deposits held by Commercial Banks have shown a robust growth of 16% YoY to Rs 17.25 trillion in February 2021.
While, on monthly basis, commercial banks’ deposits inched up by 1% MoM.
The YoY increase in deposits can be attributed to higher Remittances which reached an unprecedented level of $18.7 billion, marking a growth of 24.1% YoY during Jul-Feb FY21, while lack of cash-based business activity due to COVID-19 may have also resulted in an increase in bank deposits.
Meanwhile, fresh deposits that were utilized in expanding the Investment portfolio have grown by 33% YoY and 2% MoM to Rs.11.6 trillion in Feb’21.
Consequently, banks' investment to deposit ratio (IDR) remained at 67% as in the previous month. To recall this was 59% in Feb’20.
On the other hand, the demand for fresh disbursements remained muted despite lower interest rates as it grew by just 4% YoY and 1% MoM to Rs.8.527 trillion in the second month of CY21 as banks remained wary of overall economic conditions due to COVID-19. This has resulted in a drop in advances to deposits ratio (ADR) to 49% from 55% in Fenruary 2020.
