ISLAMABAD, June 15: The finance ministry has held out an assurance that the government is not contemplating withdrawal of its deposits from commercial banks and transfer them to the State Bank.

The ministry came out with a statement in response to a story carried by Dawn in its Sunday issue that said “at least five banks will collapse if the government implements its plan to withdraw deposits and put them in the State Bank in a move to get rid of the huge debt of over half a trillion rupees accumulated only during the last fiscal year”.

According to the finance ministry, the government will not take any step which could “adversely affect the banking sector”.

However, the statement added, the government would like to “optimise returns on funds and ensure that they are utilised for the purpose for which they are allocated”.

“The government is very conscious that sufficient liquidity must remain available with banking industry to meet the requirements of the private sector and to finance economic activities of the country,” the statement concluded.