AGL 40.00 Decreased By ▼ -0.16 (-0.4%)
AIRLINK 129.53 Decreased By ▼ -2.20 (-1.67%)
BOP 6.68 Decreased By ▼ -0.01 (-0.15%)
CNERGY 4.63 Increased By ▲ 0.16 (3.58%)
DCL 8.94 Increased By ▲ 0.12 (1.36%)
DFML 41.69 Increased By ▲ 1.08 (2.66%)
DGKC 83.77 Decreased By ▼ -0.31 (-0.37%)
FCCL 32.77 Increased By ▲ 0.43 (1.33%)
FFBL 75.47 Increased By ▲ 6.86 (10%)
FFL 11.47 Increased By ▲ 0.12 (1.06%)
HUBC 110.55 Decreased By ▼ -1.21 (-1.08%)
HUMNL 14.56 Increased By ▲ 0.25 (1.75%)
KEL 5.39 Increased By ▲ 0.17 (3.26%)
KOSM 8.40 Decreased By ▼ -0.58 (-6.46%)
MLCF 39.79 Increased By ▲ 0.36 (0.91%)
NBP 60.29 No Change ▼ 0.00 (0%)
OGDC 199.66 Increased By ▲ 4.72 (2.42%)
PAEL 26.65 Decreased By ▼ -0.04 (-0.15%)
PIBTL 7.66 Increased By ▲ 0.18 (2.41%)
PPL 157.92 Increased By ▲ 2.15 (1.38%)
PRL 26.73 Increased By ▲ 0.05 (0.19%)
PTC 18.46 Increased By ▲ 0.16 (0.87%)
SEARL 82.44 Decreased By ▼ -0.58 (-0.7%)
TELE 8.31 Increased By ▲ 0.08 (0.97%)
TOMCL 34.51 Decreased By ▼ -0.04 (-0.12%)
TPLP 9.06 Increased By ▲ 0.25 (2.84%)
TREET 17.47 Increased By ▲ 0.77 (4.61%)
TRG 61.32 Decreased By ▼ -1.13 (-1.81%)
UNITY 27.43 Decreased By ▼ -0.01 (-0.04%)
WTL 1.38 Increased By ▲ 0.10 (7.81%)
BR100 10,407 Increased By 220 (2.16%)
BR30 31,713 Increased By 377.1 (1.2%)
KSE100 97,328 Increased By 1781.9 (1.86%)
KSE30 30,192 Increased By 614.4 (2.08%)

The government's own policies - low rate of return and withholding tax on cash transactions for non-filers - are responsible for high cash to deposit ratio, said a former finance minister and a former advisor to Ministry of Finance.
Former Finance Minister Dr Hafeez Pasha, however, refused to comment on satisfactory level of cash to deposit ratio and stated that cash to deposit ratio policy is set by State Bank of Pakistan (SBP). Pasha was surprised over Finance Minister Asad Umar's statement with regard to cash to deposit ratio and stated that any policy must come from the SBP.
The previous government of the Pakistan Muslim League (Nawaz) imposed 0.6 percent withholding tax on banking transactions for non-filers which was reduced to 0.4 percent through Economic Coordination Committee (ECC) of the Cabinet decision after pressure by the business community and subsequent negotiations with them.
However, Finance Minister Asad Umar in the Finance Supplementary (Amendment) Bill, 2018 increased withholding tax on banking transactions for non-filers from 0.4 percent to 0.6 percent Hafeez Pasha said that the government must consider carefully before taking any decision as availability of financing to the private sector will have impact on inflation which is already on the rise. He said that there is no growth in the deposits.
Pasha said that people have started feeling stoke of inflation which will increase further with the cash circulation following availability of loans to the private construction sector. He said that stabilisation should be government's priority for at least two years before making financing available to the private sector for construction of houses; otherwise, cash circulation will increase enormously and stoke further inflation. Pasha suggested the government for taking up housing project after achieving stabilisation.
Former Advisor to Finance Ministry Dr Ashfaque Hasan Khan stated that cash to deposit ratio is high because of low rate of return and imposition of withholding tax on cash transactions. The people are now making deals in cash instead of routing through banks. He said that reduction in cash transactions will have positive impact on the inflation, he added.

Copyright Business Recorder, 2018

Comments

Comments are closed.