Rush at banks to avoid Zakat deduction
Last Updated on Thursday, 12 August 2010 09:07
Written by Administrator
Thursday, 12 August 2010 08:45
KARACHI: Accountholders rushed to banks on Wednesday to withdraw cash or draw pay-orders to avoid mandatory zakat deduction on the first day of Ramazan.Many accountholders have already submitted affidavits to avoid zakat deduction by banks, others draw pay orders or withdraw cash from their accounts, bankers said. Some 40 percent accountholders eligible to pay zakat have submitted affidavits, abiding banks not to deduct zakat as per law, said Khursheed Alam, Customer Service Manager, at Al-Rahman branch of United Bank Limited.Banks would deduct 2.5 percent zakat today (Thursday) on saving accounts having minimum Rs29,385 balance, the minimum amount on which this religious obligations is applicable as calculated by the Directorate of Zakat for this year, he said.Accountholders avoiding zakat deduction told The News that they prefer to pay it themselves instead of leaving this religious duty on others. The deficit of trust does not allow us to leave this duty to the government, said Kamran Mughni, an accountholder.Then there were others who don t want to pay zakat at all out of their own choice.The huge cash withdrawal did not affect money supply in the system, a top banker said. Banks were well prepared to deal with this situation, it happens every year. Therefore, the situation created no liquidity shortage in the system, he said.The State Bank of Pakistan s official website shows that except for one financial institution none availed the option of overnight repo on Monday and Tuesday to borrow additional capital from the central bank, which confirms that banks had enough liquidity to cash every cheque of their clients.Another banker said that instead of withdrawing cash, majority of accountholders prefer drawing pay orders to avoid zakat.Unless the pay order is cashed, the amount remains on banks balance sheet. Almost 99 percent accountholders draw pay orders for their own accounts, the money goes nowhere, but stays with the bank, he added.Accountholders opined that the government should end this condition of submitting zakat exemption affidavits or keep this option open till the last day of Shaban - a month prior to Ramazan. Syed Wasimuddin, spokesman for the central bank, said that the State Bank of Pakistan is not empowered to amend the condition of zakat exemption affidavits.
Courtesy : The News