Karachi: The State Bank of Pakistan (SBP) has announced a significant change in the Minimum Deposit Rate (MDR) policy, aimed at providing greater flexibility to banks. The revision will largely benefit banks by reducing their cost of deposits, especially those with a focus on individual savings accounts and private sector deposits.

According to AKD Securities Limited, the SBP has limited the MDR requirement to individual savings accounts with an average monthly balance of up to PkR10 million. This means that the MDR restriction has been removed for private sector deposits and individual accounts with balances exceeding PkR10 million. The initiative coincides with the formal launch of the INVESTPAK portal, which facilitates direct investment in government securities by both retail and corporate investors.

The revised framework is expected to have a positive impact on the banking sector. Institutions with a higher concentration of savings accounts and a deposit mix that is less sensitive to saving rates are anticipated to gain the most. By easing the MDR restrictions, banks are poised to benefit from a modest reduction in the cost of deposits, potentially enhancing their financial performance.