Taka flowing back to banks, rebuild trust

Excess cash outside the banking system has started to back as within a one-month span in June, cash held by the public decreased by nearly Tk12,999 crore.

According to central bank recent data, the amount of cash held by the public stood at Tk336,375 crore in June of this year, down from Tk349,374 crore in May indicating that cash outside banks dropped by 3.72 percent , in just one month.

By contrary, compared to June of last year, cash held by the public remains 13.47 percent higheras in June of last year, the amount was Tk296,451 crore. In May, cash outside banks had jumped by nearly Tk50,000 crore in a single month.

Higher interest rates, improving confidence in the financial system, strong remittance inflows and a lack of attractive alternative investment options encouraged households to keep their savings in banks, sector insiders attributed.

In June, total deposits across banks reached approximately Tk20,79,296 crore, up from Tk20,41,099 crore in May.

In a single month, deposits grew by Tk38,197 crore, or 1.87 per cent Year-on-year,deposits increased by Tk201,732 crore, representing a growth of 10.74 per cent.

Correspondingly, deposits collected through agent banking in the country crossed Tk 51,129 crore by the end of June this year, according to Bangladesh Bank’s agent banking statistics published on Thursday.

Meanwhile, rebuilding trust in the banking sector, government taking steps as Finance Minister Amir Khosru Mahmud Chowdhury recently assured depositors of the country’s troubled banks would receive their deposits along with the interests, ruling out any possibility of a “haircut”, while acknowledging that the process would take time because the banks are suffering from mounting losses.

Under the recent Deposit Protection Act, provisions have been made to quickly return funds up to a specified limit to eligible depositors in the event of a bank liquidation.