ISLAMABAD: Deposits held by Pakistan’s scheduled banks have nearly doubled over the past four years, reaching Rs40.83 trillion in September 2026, prompting renewed concerns over the banking sector’s reliance on government lending rather than financing businesses and industrial development.
The deposit base has expanded from Rs21 trillion in September 2022, representing an increase of Rs19.83 trillion during the four-year period.
Former minister and Chairman of Pakistan Economic Policy and Business Development Dr Gohar Ejaz said on Saturday that the substantial growth in bank deposits highlighted the increasing volume of financial resources available within the country’s banking system.
However, he stressed that these resources must be directed towards productive economic activities to support sustainable growth, industrial expansion and employment generation.
Ejaz said banks should prioritise financing businesses and industries rather than concentrating their lending on the government, arguing that long-term economic stability depended on strengthening productive sectors.
The sharp increase in deposits has also brought attention to the allocation of financial resources between government borrowing and private-sector investment.
While the expanding deposit base provides banks with greater funding capacity, it does not automatically translate into increased lending to businesses or higher investment in the economy.
Economists have long raised concerns that heavy government borrowing from commercial banks can limit the availability of financing for private enterprises, particularly when banks consider government securities more attractive because of their returns and relatively lower credit risks.
Such lending preferences can create difficulties for businesses seeking capital to expand operations, modernise production facilities and generate employment.
Small and medium-sized enterprises may face greater challenges because of higher borrowing costs, strict collateral requirements and limited access to formal financing.
A continued preference for government securities over private-sector lending could restrict credit availability for productive industries and weaken the contribution of businesses to economic growth.
The rise in scheduled bank deposits nevertheless represents a substantial pool of financial resources that could support industrial investment, business development and job creation if channelled into productive sectors.
Ejaz maintained that the banking sector must play a more effective role in supporting economic activity by ensuring that the growing volume of deposits translates into financing opportunities for businesses and industries.
The central challenge, he argued, is not merely increasing deposits but ensuring that available financial resources contribute to investment, production, employment and sustainable economic development.
