Cash held outside the banking system in Bangladesh continued to decline in February, signalling a gradual shift in depositor sentiment after years of distrust driven by scandals, instability and corruption.
According to Bangladesh Bank data, currency outside banks dropped to Tk聽2,71,495 crore in February from that of Tk聽2,74,230 crore in January and Tk聽2,76,371 crore in December 2024.
The figure had peaked at Tk聽2,92,434 crore in August 2024, reflecting deep public distrust in the financial sector amid widespread irregularities and governance failures under the previous Awami League-led government.
Bankers have attributed the modest decline to a gradual restoration of confidence among depositors, particularly in banks with stable operations and fewer controversies.
The marginal improvement is seen as a response to the recent overhaul of bank boards by the interim government, which came to power after a mass uprising led by students that ousted the Awami League-led regime on August 5, 2024.
The earlier surge in cash withdrawals was driven by a crisis of trust in the banking sector, exacerbated by high-profile loan scandals and mismanagement under the previous administration.
Although the figures have dropped since August 2024, the current levels remain elevated, indicating that the road to full recovery is far from over.
Beyond trust issues, inflationary pressure has also contributed to the trend. With inflation staying above 9 per cent since March 2023, many households 鈥� particularly fixed-income and low-income families 鈥� have found it increasingly difficult to manage basic expenses.
As a result, a large portion of the population continues to rely on cash in hand to navigate daily necessities, rather than parking funds in bank accounts.
Against this backdrop, financial experts reminded that the country鈥檚 intention should be to develop a cashless money transaction system.
The more developed a country, the more cashless transactions take place there, they said.
Cashless transactions are not only a parameter of development but also ensure transparency in the financial system, they added.
Meanwhile, overall bank deposits, excluding interbank and government accounts, increased slightly to Tk聽17,92,685 crore in February from Tk聽17,81,287 crore in January.
Lingering concerns over corporate governance and non-performing loans have kept many depositors cautious. Economists warn that unless deeper reforms are implemented to ensure transparency and accountability, the recovery in banking sector confidence could remain fragile.
The persistence of cash outside banks poses macroeconomic risks. It undermines monetary policy transmission, limits credit availability, and hampers financial inclusion.