Business Report :
The amount of money in circulation outside the country’s banking system continued to surge in August, driven by depositors’ decreased confidence and inflationary pressures.
According to Bangladesh Bank data, currency outside banks increased to Tk292,434 crore in August, up from Tk291,630 crore in July.
It was Tk290,436 crore in June, Tk270,658 crore in May and Tk264,349 crore in April.
Bankers said that the depositors had been withdrawing significant amounts of money since the start of the year as they were worried about the safety of their funds due to widespread irregularities in the country’s banking sector during the Awami League regime.
The Awami League-led government was ousted by a student-led mass uprising on August 5.
In July, withdrawal pressure intensified due to government restrictions imposed during the nationwide protests demanding reforms to the government job quota system, they said.
The impact continued even after the fall of the government as uncertainty about the economy continued.
After the political shift in August, the central bank restructured boards of 11 banks, which spread panic among the depositors as they became more concerned about their money.
Moreover, the new interim government began to freeze bank accounts of members and activists of Awami League and its allies, which also provoked many to withdraw money and hide them away.
Bankers also said that clients’ trust in the banking sector eroded amid massive loan scandals and irregularities in several banks.
Rising living costs also led many people to hold more cash in hand, they said.
Although inflation eased slightly to 9.92% in September from a peak of 10.43% in August, it still remained high, affecting particularly fixed-income households.
Fixed-income and low-income households, in particular, have been struggling to meet basic needs as commodity prices continued to rise, leading to more withdrawals than deposits.