BEFORE it’s time to wish each other a very hearty Eid Mubarak, let’s spare a quick thought for the kinds of manias that characterise this time of year.

While at the bank the other day, sitting in the manager’s office because like the rest of the clientele I too have taken to the habit of treating the branch manager as my personal relationship manager, I noticed how the poor fellow was taking three calls at a time.

With one phone pressed to each ear, and a third one waiting in his hand, while two other clients like me sat in his office waiting for their work to get done, the diligent fellow spoke feverishly yet politely into each receiver.

“Yes sir,” he intoned, “you can get hundreds, but thousands will take a little time. I know sir, you mashallah have a big household.” Then there’d be a pause as he listened.

“I can get you five hundreds too, but thousands sir, thousands will take a little time. Yes, 2pm is fine, you can send your car by then.”

As soon as he put the phone down, he picked up the other that had been ringing non-stop throughout the conversation. “Hello, jee sir, how are you? Thousands? Thousands are difficult sir… much demand… running low… next delivery due in an hour … will take some time … how about hundreds? … mashsallah, big household, I know … ok sir, 2pm.”

And so on the whole time while I sat there. It was impossible to not be a little amused, but more than that I was amazed at the insane demand for high denomination cash notes, and fresh crisp new ones at that. It’s Eid time after all, and Eid could feel a little less mubarak if the notes are not crisp and the denomination is weak.

What is it with our demand for cash? Pakistan has amongst the most resilient cash preferences in the world, topped only by countries like Afghanistan that don’t have much of a financial system.

When our country’s total “currency in circulation” figure — released by the State Bank every two weeks — is plotted over the past 20 years, the trend of the line is more or less straight throughout the period.

The same trend line for almost every other country in the world goes downward as the financial system deepens and a growing share of transactions are conducted through channels offered by the banking system.

But here in Pakistan, cash has remained the preferred medium of exchange and store of value. Consider some numbers.

If you took all the currency notes that circulate in Pakistan, they would add up to just under Rs2 trillion. And the total amount of money placed in banks, in both demand and time deposits, is just under Rs7tr.

This means that the proportion of money that circulates as cash in our economy is just under one-third of the total amount held by banks, a very large proportion.

Consider the same numbers for India where the total currency in circulation is about one-seventh of the total amount held by banks, meaning a far larger proportion of their money supply is parked inside the banking system than is swishing around as cash.

In Pakistan, the preference for cash has remained resilient in spite of the privatisation of four of the largest banks in the country, in spite of the availability of online and mobile banking, and in spite of growing insecurity and high inflation, which make cash transactions risky and cash holdings expensive.

The numbers get a little crazy around this time. Bank branches struggle to meet the massive demand for cash withdrawals from ATMs which can touch peaks beyond Rs20 million per day from a single ATM machine. The State Bank has to release freshly printed, crisp new notes in quantities like 150 billion or thereabouts to meet the spike in demand every year this season.

Almost Rs250bn are drained out of the banking system during this season to pay for shopping and Eidi and also because of frenzied withdrawals to avoid zakat deduction.

These numbers compare favourably with some of the larger heads in our fiscal operations and give an idea of the scale of the cash mania that breaks out every year as Ramazan draws to a close.

And that’s not all. Labour empties out of factories, and buses and trains go upcountry from Karachi in numbers not seen any other time of year. The busiest rail link in Pakistan is the one that connects Karachi with southern Punjab, and bus stands and railway stations bear the look of a cattle market in the days leading up to Eid.

The port continues to operate, except on Eid day specifically, but transport is badly affected as all drivers are in a rush to go upcountry to be with their families for the occasion. Importers and exporters rush to get their cargo in or out of port before the transport lull sets in.

The whole machine works at a frenzied pace in the days leading up to Eid, and today, when you are reading this, dear reader, the madness is at its peak.

If you are an operations manager with a textile exporter who has an order to fulfil, or an importer whose cargo has just landed, or a branch manager at a bank, or the breadwinner in one of those households whose self-worth is tied up with a flashy display of earning capacity, well then you have my sympathies for the day.

Probably the only place you’ll find any sympathy in this season so lap it up, even if it’s being offered for reasons you’ll understand far too late in life.

In the meantime, it’s all about Eid, and here’s wishing all my readers a very hearty Eid Mubarak!

The writer is a Karachi-based journalist covering business and economic policy.

khurram.husain@gmail.com
Twitter: @khurramhusain