In Pakistan, during the last decade banking sector has been reduced in terms of number of banks and their operations. This paper is an attempt to seek the impact of banks performance on Capital formation in Pakistan. Capital Formation is low in Pakistan and a number of factors are considered responsible for it but through this paper, variables of banks performance in Pakistan has been chosen to analyze the impact on Capital formation. Gross Fixed Capital Formation is taken as a dependent variable with major indicators of banks performance as an independent variables. Time Series Annual data has been employed from 2004 to 2023 which constitutes 32 observations in a series. Auto regressive distributive Lag (ARDL) tests have been run to analyze the long and short run relationship among study variables. Results reveal the long and short term relationship between Gross Fixed Capital Formation and other variables. Total deposits, banks credit to private sector and banks profitability shows positive relation with capital formation. It is concluded that banks performance in Pakistan has significant relationship with capital formation in the country. The study suggests robust working of banking system in Pakistan. Through this efficient investment could be possible in the country.