Deposits grow by Tk31,000cr in June – 2nd highest in banking history
The highest ever deposits was recorded at Tk34,132 crore in January 2021
Deposits increased by Tk31,181 crore in June, marking the highest monthly growth in the last fiscal year and the second-highest in the country's banking history, according to data from the Bangladesh Bank.
At the end of June, the deposits amounted to Tk15.95 lakh crore, which is an increase from Tk15.64 lakh crore in the previous month.
Syed Mahbubur Rahman, managing director of Mutual Trust Bank, told The Business Standard, "The main reason behind the rise in deposits is the increased interest rate for depositors."
"Besides, June witnessed the highest remittances in the outgoing fiscal year, which were also converted into taka and added to deposits," he added.
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The top banker said the new money that the central bank is injecting into the market is also entering as bank deposits, which is a contributing factor to the increase in deposits.
"The increase in deposits is beneficial for the banking sector, particularly because many banks are facing a liquidity crunch," he added.
The central bank's data indicates that the deposit growth in the banking sector had been declining since November 2022. In that particular month, deposits fell by Tk3,155 crore.
In January this year, deposits decreased by Tk1,398 crore. However, since then, the deposits have been increasing every month. In April, deposits increased by around Tk24,902 crore, and in May, they increased by Tk15,881 crore.
In January 2021, deposits increased by Tk34,132 crore, which was the highest ever recorded.
A senior official at the central bank told TBS that inflation has been increasing in the country over the past year. As a result, people had to utilise their savings to cover their increased expenses. The official further mentioned that the deposits would have increased even more if the situation were normal.
He said the deposits in Sharia-based banks are not increasing in the same way. And even the excess liquidity of several banks in this category has gone negative.
Treasury officials at several banks told TBS that although customers' confidence in the banking sector is returning. But it is not increasing equally in all banks.
Customers are still hesitant to trust Islamic banks for making deposits. As a result, they are choosing to deposit their money in conventional banks. The reason cited by customers is that major scams have not happened in conventional banks yet.
According to data from the central bank, the amount of currency outside banks was Tk2.25 lakh crore at the end of May 2022. By May 2023, it had increased to Tk2.55 lakh crore, and at the end of June, it amounted to Tk2.91 lakh crore.
The increase in the amount of money in circulation is a result of the central bank injecting new money. Bankers believe that this additional money will eventually be added to banks.
At the end of the outgoing financial year, the deposits grew by 8.44%, which was 8.90% a year ago.
Ahsan H Mansur, executive director of the Policy Research Institute (PRI), said the Bangladesh Bank had to sell a large amount of dollars due to the dollar crisis during the outgoing financial year.
"A significant amount of money has moved from the market to the central bank, and this reduction in available funds has affected the higher growth in deposits," he added.
