Bank deposit growth falls below 10% mark in October

Bank deposit growth eased to 9.62% at the end of October, continuing a downward trend after crossing 10% in August and settling at 9.98% in September. 

The Bangladesh Bank released the latest figures on deposit volumes and growth today (10 December).

Infographic: TBS

According to the central bank data, total deposits stood at Tk19.24 lakh crore in October, compared to Tk17.55 lakh crore in the same month last year.

Senior bankers said deposit growth has strengthened in well-governed, stable banks, while weaker institutions continue to struggle due to a persistent crisis of confidence.

Bank deposits rise nearly 10% in Sep, second-highest growth in 18 months

Sohail R K Hussain, managing director of Bank Asia PLC, said, "A large portion of customer funds remains stuck in weak banks. Over the past year, deposits in strong banks have grown at a much faster pace, but confidence issues remain acute in the weaker institutions."

Economists and bankers attribute the softening deposit growth to prolonged economic stress, elevated inflation and rising joblessness, which have eroded household savings capacity.

Former World Bank lead economist Dr Zahid Hussain noted that remittances remain a key driver of bank deposits, as most of the inflows ultimately enter the banking system. 

"High inflation and unemployment have made it difficult for ordinary people to save anything at month-end," he added.

Cash outside banks declined

Currency held outside the banking system declined by Tk7,361 crore year-on-year, standing at Tk2.70 lakh crore in October, compared with Tk2.78 lakh crore a year earlier. 

However, analysts caution against assuming that the reduced cash in circulation has moved into the formal banking sector. 

Bangladesh Bank does not publish disaggregated data on where the funds flow, leaving open the possibility that the money is being absorbed by non-bank financial channels, retail trade or informal markets.