Tk9,000cr returns to banks in September

With the political instability following the fall of the Awami government somewhat easing in September, nearly Tk9,000 crore was deposited back into banks, signalling a partial return to stability and trust in the banking sector.

By the end of September, cash outside the banking system had decreased from Tk2.92 lakh crore to Tk2.83 lakh crore, according to data from the Bangladesh Bank released yesterday. 

In August, the amount of cash in people's hands increased by Tk804 crore compared to the previous month of July. The figure stood at Tk2.58 lakh crore at the end of August last year.

Bankers said due to concerns about government stability and irregularities in the banking sector, people had withdrawn money from banks. However, renewed trust in banks and regulatory reforms by the central bank have encouraged depositors to return their funds, according to the bankers.

Meanwhile, in September, the deposit growth in banks increased by 7.26% or Tk9,748 crore compared to the same period last year, reaching Tk17.41 lakh crore. In August, total deposits fell to Tk17.31 lakh crore, reflecting a negative month-on-month growth of 0.16%. 

Year-on-year, the deposit growth for August stood at 7.02%, the lowest in 18 months, with the previous low of 6.86% recorded in February 2023.

An analysis of central bank data shows that deposits in the banking sector typically increase month-over-month. However, in July and August, deposits unexpectedly decreased. 

At the end of June this year, total deposits in the banking sector were Tk17.42 lakh crore, indicating a reduction of nearly Tk11,000 crore over the two-month period.

Several senior officials from private banks have also said that despite the country's current situation, deposits have increased significantly in well-performing banks. 

Moreover, weaker banks are regaining some customer confidence, aided by liquidity support from the central bank, they added.

Dr Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development, told The Business Standard, "The return of public funds to banks is a positive sign, indicating renewed confidence in the banking system."

"We are actively working to stabilise each bank," said Bangladesh Bank spokesperson Husne Ara Shikha yesterday in a press briefing, reaffirming that the central bank's policies are aimed at rebuilding public trust in the financial system.