Bank deposits rise nearly 10% in Sep, second-highest growth in 18 months
Confidence returns to top-tier banks as customers shift funds from weaker lenders
Highlights:
- Bank deposits grew 9.98% year-on-year in September 2025
- Deposit growth driven by trust in strong, well-governed banks
- Higher bank interest rates outpaced inflation, attracting more deposits
- Declining treasury yields prompted shift from government securities to banks
- IBBL, IFIC, and UCB saw strong deposit recovery post-government change
- Currency outside banks fell by Tk8,829 crore year-on-year
Bank deposits grew by 9.98% year-on-year at the end of September 2025, marking the second-highest growth rate in the past 18 months.
This comes after a 10.02% increase in August, the highest in 17 months. The momentum continued into September, maintaining a positive trend for two consecutive months – signalling a steady return of confidence in the banking sector after months of stagnation.
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Before August, deposit growth had remained below 9% for 13 straight months. The last time it crossed that threshold was in June 2024, when the rate reached 9.25%, according to the central bank's latest report released yesterday.
Experts have described September's figures as "encouraging", saying that although the rate was slightly lower than August, the overall performance reflects a recovery compared to the previous 16 months.
They attribute the increase to three main factors – a shift of deposits towards strong banks, relatively higher interest rates compared to inflation, and a fall in treasury bill and bond yields.
Top-tier banks have seen the most growth as depositors increasingly trust well-governed institutions. Following the change of government last year, many customers withdrew funds from weaker banks and moved them to stronger ones.
Currently, most banks offer deposit rates between 8.5% and 9.5%, which remain higher than the 8.36% inflation recorded in September.
The report noted that during September, deposit interest rates were 25 to 50 basis points above average, encouraging people to park funds in banks as a safe investment option.
At the same time, yields on treasury bills and bonds began to decline in September, prompting many individuals and institutions to shift their investments from government securities to bank deposits.
Mashrur Arefin, managing director of City Bank, said, "Deposits are increasing in well-managed banks because these institutions operate under proper guidance and regulation, which boosts public confidence.
"After the government changed, people withdrew money from weaker banks but are now returning to banks that follow compliance and international standards."
"The yield on treasury bills and bonds is falling, while deposit rates at banks remain attractive, between 9.5% and 10%. The economy is expanding, and as that happens, money naturally flows into banks. This is what we call economic momentum," he added.
Arefin noted that year-end campaigns by banks have also played a role in boosting deposits.
"Toward the end of the year, most banks launch deposit campaigns to meet their annual targets," he said. "Interest rates on deposits in Bangladesh are still very attractive compared to other countries, where rates are as low as 1% to 2%."
Md Ahsan-uz Zaman, managing director of Midland Bank, echoed similar views. "Deposits are rising in banks that have improved their quality and governance. Confidence in the banking sector has grown, which is why deposits are increasing," he said.
A senior executive at a private bank told The Business Standard that the decline in treasury bill and bond yields has led many individual and institutional investors to move funds into bank deposits.
According to Bangladesh Bank data, total deposits in the banking sector stood at Tk19.14 lakh crore at the end of September 2025, compared to Tk17.41 lakh crore in the same month last year.
Deposits returning to IBBL, IFIC, UCB
Customer confidence is gradually returning to Islami Bank Bangladesh Ltd (IBBL), IFIC Bank, and United Commercial Bank (UCB), which have all reported strong growth in deposits in recent months.
After the change in government, Bangladesh Bank dissolved the boards of several banks, including IBBL, IFIC, and UCB. Fearing instability, many depositors withdrew their funds, putting pressure on liquidity.
Despite concerns about governance, these banks did not face difficulties in repaying depositors. After a year of weak growth, deposits are once again on the rise.
IBBL, the country's largest private bank, recorded a 14.7% growth in deposits over the past year, driven by renewed public trust. As of September 2025, deposits at IBBL stood at Tk179,579 crore, up from Tk156,564 crore in September 2024.
The bank came under pressure after 5 August 2024, when Chattogram-based businessman S Alam lost control of its board, sparking panic among depositors who rushed to withdraw funds.
IFIC Bank also faced unrest and internal protests following the political transition, when its then-chairman, former prime minister Sheikh Hasina's adviser Salman F Rahman, was removed. Rumours that the bank might collapse prompted a wave of withdrawals.
However, over the past year, IFIC's deposits have grown by Tk5,714 crore, a 12.6% rise, reaching Tk51,127 crore in September 2025, up from Tk45,412 crore a year earlier.
Syed Mansur Mustafa, managing director of IFIC Bank, said, "Our deposit base is expanding. No matter how large the withdrawal request, customers always received their money immediately, which strengthened confidence in our bank. As a result, deposits have grown and our liquidity position is now much stronger."
UCB also faced significant withdrawals in the wake of the government change, but the bank has since recovered, adding over Tk11,000 crore in deposits within a year. Deposits rose from Tk54,439 crore in September 2024 to Tk65,524 crore in September 2025.
Currency outside banks dip
Bangladesh Bank data show that currency held outside the banking system declined by Tk8,829 crore year-on-year. As of September 2025, currency outside banks stood at Tk2.74 lakh crore, compared to Tk2.83 lakh crore in September 2024.
However, it is not yet clear whether Tk8,829 crore has flowed back into the formal banking system, as the central bank does not provide a breakdown of that data. The money may also have been channelled into other sectors.
