Staff Reporter :
Bank deposits in Bangladesh crossed Tk 17 lakh crore for the first time in May, marking a year-on-year growth of 8.77 percent, driven by the withdrawal of the single-digit bank rate.
According to Bangladesh Bank data, deposits increased by 8.77 percent to Tk 17,00,608 crore in May, excluding inter-bank and government deposits, compared with Tk 15,63,499 crore in the same month of the previous year.
Among the total deposits, time deposits increased by 9.76 percent to Tk 15.13 lakh crore, while demand deposits rose by 1.36 percent to Tk 1.86 lakh crore.
However, deposit growth was 14.43 percent in May 2021, 11.35 percent in May 2020, and over 10 percent in May 2019.
The growth in deposits followed the central bank’s decision to lift the 9-percent lending rate and 6-percent deposit rate caps in July 2023.
On May 8, the BB introduced a market-based approach for determining lending rates, resulting in lending rates rising to 14-17 percent and pushing deposit rates higher.
Bankers said that higher interest earnings added to clients’ deposits, thereby increasing the total deposit volume in banks.
Moreover, the deposit growth has recently slowed due to rising inflation, a contractionary monetary policy, and high currency outside banks.
The deposit growth rate in banks declined due to inflationary pressures in the country as people required withdrawing their funds to meet their daily expenses.
According to Bangladesh Bureau of Statistics data, overall inflation rose to 9.89 percent in May, the highest since October 2023, when it hit 9.93 percent. Inflation has remained near 10 percent since March 2023.
Meanwhile, various loan anomalies in several banks exposed the sorry state of the country’s banking sector, which also eventually provoked many depositors to withdraw money from banks.
Consequently, currency outside banks soared to Tk 2.7 lakh crore in May from Tk 2.55 lakh crore in May 2023.