A SHARP increase in the number of bank accounts having deposits exceeding Tk 1 crore in the last quarter of 2024 brings a number of issues and concerns to the fore. As Bangladesh Bank data show, the number of such accounts rose by 4,954 in the quarter, reaching 122,081 from 117,127 in September. While the rise indicates the restoration of depositor鈥檚 confidence in the banking sector, it suggests a growing financial concentration, widening inequality, limited investment opportunities and a poor business environment. All of these are worrying trends and negative implications of the concentration of wealth surpass the positive implications of a reviving banking sector. The concentration of more than 40 per cent of the aggregate deposits in a few high-value accounts shows a dismal inequality situation. Out of the 16.32 crore bank accounts nationwide, 11.81 crore contain deposits of less than Tk 5,000 each while only 0.075 per cent accounts hold 41 per cent of the total deposits. On the other front, the deposit in the bank accounts of the poor has dropped significantly. This corroborates the fact that wealth accumulation by the rich has continued unabated when a record inflation has pushed millions under the poverty threshold.
The explanation that some economists have come up with that the increase in the number of accounts with Tk 1 crore and above has been caused by a lack of investment opportunity and a narrowed scope for money laundering appears an inadequate, if not totally misleading, explanation. Such an explanation misses the dangerously widening income inequality situation. Moreover, the lack of investment opportunity, believed to have largely caused the increase in high-value accounts, is also worrying as it negatively impacts employment generation. The concentration of wealth in high-value accounts suggests that people with money are still not confident about exploring alternative investments, which could have created jobs. That employment generation has remained stuck 鈥� declined, in fact 鈥� is evident in the persistent decline in credit flow. According to Bangladesh Bank data, private sector credit flow has been on a steady decline for six consecutive months and it fell sharply to 7.15 per cent in January. The fall indicates a stagnant business environment, caused by political unrest and weak law enforcement. Businesses appear to have adopted a cautious 鈥榳ait-and-see鈥� approach, holding back new investments. As the private sector employs about 90 per cent of the work force, a consistent decline in private sector credit flow and a stagnant business environment come as highly concerning.
The government should, therefore, shore up the issues to improve the business environment so that people with money can invest in businesses and, thus, generate employment. The government should also mend the economic policy to reduce inequality.
