Cash Outside Banking System: Surged by Tk 40,982cr in last 2 months, ahead of election
Business Desk :
Cash held outside the banking system in Bangladesh jumped sharply in January as public distrust in banks deepened and cash withdrawals surged ahead of the February 12 national election.
Bangladesh Bank data showed that currency outside banks rose by Tk 40,982 crore within two months, reaching Tk 3,10,000 crore at the end of January from Tk 2,69,018 crore in November last year.
Bankers said that election related spending played a major role. As election campaigns intensified across the country, candidates increasingly relied on cash to meet campaign expenses, pushing up withdrawals from banks.
They said that such patterns often emerge ahead of national polls, when cash transactions rise sharply across the economy. Moreover, depositors may also withdraw funds in large volumes amid growing anxiety over bank mergers, weak balance sheets and uncertainty about the safety of deposits.
Bangladesh Bank has already approved the merger of five crisis hit shariah based banks and is reviewing the asset quality of another 11 lenders as part of a broader clean up of the sector.
Fresh panic spread after the central bank decided to cap profit rates on all types of deposits at the five merged banks at 4 per cent, bankers said. The surge followed several months of easing pressure. Cash outside banks declined steadily from July to November last year as liquidity conditions improved and confidence showed signs of recovery.
Bangladesh Bank data showed that currency outside banks fell from Tk 2,87,294 crore in July to Tk 2,76,494 crore in August, Tk 2,74,724 crore in September, Tk 2,70,449 crore in October and Tk 2,69,018 crore in November, before turning upward in December.
To tighten oversight, the Bangladesh Financial Intelligence Unit on January 11 instructed banks and financial institutions to submit cash transaction reports for any deposit or withdrawal of Tk 10 lakh or more in a single day.
The reporting requirement applies to all forms of cash transactions, including over-the-counter services, ATM withdrawals and cash-linked online transactions.
Bangladesh Bank has also planned temporary restrictions on digital transactions during the election period. Mobile financial services such as bKash, Rocket and Nagad may face daily transaction caps of Tk 10,000, with a maximum of Tk 1,000 per transaction.
Person-to-person transfers through internet banking may remain suspended from February 8 to February 13. Distrust in the banking sector has grown since the central bank began disclosing the true financial condition of banks following the fall of the Awami League government.
Non-performing loans surged to Tk 6.44 lakh crore in September 2025 from Tk 4.20 lakh crore in March the same year, exposing deep-rooted weaknesses. High living costs have added to the shift toward cash. Bangladesh Bureau of Statistics recorded the overall inflation at 8.49 per cent in December, compared with 8.29 per cent in November.
