Bank deposits have dropped by about Tk聽11,000 crore in recent months, driven mainly by anxiety among depositors.
According to Bangladesh Bank data, deposits (excluding interbank and government deposits) fell to Tk聽17,31,260 crore in August, down from Tk聽17,34,026 crore in July and Tk聽17,42,224 crore in June.
Deposits usually increase steadily as banks add monthly interest payments back to principal amounts, thus increasing deposit balances, bankers said.
Therefore, the recent decline signals issues in the banking sector, they said.
They said that a combination of factors, including a crisis of confidence among depositors due to massive irregularities and an increase in non-performing loans in the country鈥檚 banking sector during the now deposed Awami League regime, high inflation, macroeconomic instability and political uncertainty, was behind the drop in deposit volume.
These issues led to heavy withdrawals, reduced deposit inflows, and the shrinking of the overall deposit base, they said.
Of the total deposits, Tk 15.37 lakh crore of the deposits was time deposits, while Tk聽1.93 lakh crore was demand deposits.
Despite banks offering higher interest rates on deposits, these failed to attract depositors.
Instead, rising inflation, a tight monetary policy and an increase in currency held outside banks further contributed to shrinking deposit volumes.
Many depositors withdrew their savings to cover basic expenses as inflation soared.
Although inflation eased slightly to 9.92 per cent in September from a peak of 10.43 in August, it remained high, affecting particularly fixed-income households.
Fixed-income and low-income households have been struggling with rising commodity prices, leading to more withdrawals than deposits.
Currency held outside banks surged to Tk 2.92 lakh crore in August, up from Tk 2.66 lakh crore in July.
Furthermore, many depositors found national savings certificates, which offer about 12 per cent interest rate, to be a safer and more lucrative investment option compared with banks.
While the deposit volume shrank, loan disbursement continued to rise, reaching Tk 20.98 lakh crore in August, up from Tk 20.85 lakh crore in July.
The interbank currency rate also surged to Tk 120 in August 2024 compared with that of Tk 84.8 in August 2021.
