KARACHI, Jan 20: Five big local banks namely National Bank, Habib Bank, Muslim Commercial Bank, United Bank and Allied Bank meet the bulk of the additional requirement of cash during Eidul Azha, inquiries made at these banks show.

People throng at the branches of the said banks to take out money for buying sacrificial animals on Eidul Azha, as they do on Eidul Fitr also for Eid-related spending, simply because these banks entertain a higher number of account holders, including smaller ones, than foreign banks or other local banks.

"Our branches operate even in the remotest areas of Pakistan as well as in all major towns and cities. That is why we see more cash withdrawals on Eid and Eidul Azha than other banks," explained a senior official at one of the big five banks.

At the end of June 2004, these banks were operating with 5362 branches across Pakistan. Against that 34 other banks (23 local and 11 foreign) were running 1432 branches.

Bankers say that as a couple of other local banks are also spreading their branch networks, they too have started witnessing cash withdrawals, though not as intense as being witnessed by the big five.

Senior bankers estimate that this year's Eidul-Azha related withdrawals between Rs12 billion and Rs15 billion. Making such estimate is very difficult but one pointer is the timing and the details of withdrawals.

When the month of Eidul Azha starts, reports of higher cash withdrawals start pouring in at head offices of major banks from their branches. Judging by the nature and the size of withdrawal and analyzing the same with the year-ago trend, the officials of these banks are able to tell how much money has flown out of their coffers for spending on Eidul Azha.

The fact that the inter-bank market as such remains short of cash during Eidul Azha also indicates that people are withdrawing cash. This year also, banks saw an acute shortage of cash since the start of the Islamic month of Zilhijjah on January 12.

Banks had to turn to the State Bank for borrowing overnight funds on every working day minus one since then. Though there were other reasons for cash shortage in inter-bank market, bankers say that the Eidul Azha related withdrawals worsened the crisis.

Senior bankers say that the 80-90 per cent of the money taken out from the banks on the occasion of Eidul Azha flows back into the banking system after six-eight weeks adding that the process sometime starts the very next week. Just see how.

When people pay for the sacrificial animals, those selling these animals use the money either for buying something else or for paying back to main brokers who sell the animals in large numbers on behalf of cattle raisers. Once these brokers get payments they make final payments to cattle raisers after using part of it for indulging in Eidul Azha related spending themselves.

By the time the cattle raisers receive final payments for the supply of sacrificial animals, Eidul Azha is over but they too spend it within weeks on clearing debts or for buying things they keep waiting for throughout the year, like dowry for their daughters or agricultural machinery or crop seeds etc.

Similarly, the money that Madaris and other organisations withdraw form banks for purchasing animal hides is spent within days. If the tanneries themselves buy hides from Madaris and other organizations, they put it in their tills for meeting day to day cash requirements.

But if the brokers buy the same on behalf of the tanneries they get paid from the tanneries and use the money for meeting their business and individual requirements, including Eidul Azha related shopping. The bulk of the money thus changing hands finally rests with the banking system and it does not take more than six to eight weeks.