People turning to foreign banks after losing trust in local ones

Foreign banks operating in Bangladesh saw deposits increase by around Tk 6,000 crore in the December quarter at a time when local public and private banks were scrambling for deposits after news on loan irregularities and frauds emerged. According to Bangladesh Bank, deposits of nine foreign banks operating in the country stood at Tk 73,980 crore at the end of the December 2022 quarter, up from Tk 68,143 crore in the September quarter. Deposit growth was 8.57 per cent in the December quarter.
Besides, compared to the December quarter of 2021, the growth of deposits in December 2022 has been Tk 9,118 crore or 14 per ent. In December 2021, deposits at foreign banks stood at Tk 6,4861 crore. Though state-owned and private banks are offering higher deposit rates than foreign banks, people tend to invest more in places where security is more profitable, but profits are less.
Some of the best banks in the country have seen large withdrawals after information spread about the loan irregularities in the market. Customers cannot keep this money for a long time. They invest in different ways. Last November, after news about loan frauds in several Islamic banks appeared in the media, the deposits in those banks decreased. At the same time, central bank data shows that the amount of money outside banks has increased from last July to December.
According to the monetary survey report of the central bank, the amount of money outside banks was Tk 2 lakh 36 thousand crores in June 2022. In January 2023, the amount of money in people’s hands increased to Tk 2 lakh 62 thousand crores – implying that in seven months, people have withdrawn about Tk 26 thousand crores from the banks. At the end of June 2022, deposits of private banks were Tk10 lakh 59 thousand crores. Deposit growth during the period was 4.90 per cent compared to the previous March quarter. However, the deposit growth was very poor as information about the country’s inflationary debt irregularities came to the market.
For the last decade, loan defaulters have been getting policy support and clean chit in various ways that devastated the banking sector’s health. There is no respite in the near future as the political goons are the kingpins who earn blessings from the high-ups.