Deposit growth returns to double digits after 17 months

After 17 consecutive months, bank deposit growth has returned to double digits, reaching 10.02% at the end of August, according to Bangladesh Bank data.

From March 2024 to July 2025, deposit growth had remained in single digits – at 8.50% in July. The last double-digit growth was recorded in February 2024 at 10.43%.

Bankers and economists attribute the recent rebound to several factors, mainly the fall in treasury bill and bond yields. As returns from government securities declined, both individuals and institutions have shifted funds back to bank deposits.

Just three months ago, treasury yields hovered between 11% and 12%, but by October they had dropped below 10%. Bankers say the rates on treasury instruments and bank deposits are now nearly aligned, encouraging investors to return to the banking system.

Mohammad Ali, managing director and CEO of Pubali Bank, said, "As treasury bill and bond yields continue to decline, many corporate entities are refraining from fresh investments in these instruments. Instead, they are placing their funds in bank deposits."

He added that cash circulating outside the banking system has decreased, with a large portion now returning to banks. "Inflation has eased compared to before, reducing living costs and allowing people to save more. As a result, deposits have increased somewhat," he said.

Syed Mahbubur Rahman, managing director and CEO of Mutual Trust Bank, said deposit growth has also been driven by rising remittance inflows, which maintained strong momentum last month.

Bank Asia Managing Director Sohail RK Hussain said earlier instability in the banking sector had caused deposit erosion, but recent central bank measures have helped restore confidence. "Strong remittance inflows are boosting money circulation, and as public trust in banks returns, families are saving more," he said.

He added that the decline in treasury yields has prompted companies to shift funds back to banks, easing the liquidity strain that had deepened when rates crossed 12%.

Sohail noted that the central bank's recent dollar purchases from commercial banks through auctions have further increased market liquidity.

Currently, treasury bill yields have dropped to single digits. In the latest central bank auction, yields on 91-, 182-, and 364-day bills stood at 9.50%, 9.71%, and 9.60%, respectively. Similarly, yields on 5-, 10-, 15-, and 20-year bonds were 9.33%, 9.89%, 9.67%, and 9.70%.

A treasury head of a private bank told TBS that the central bank's dollar purchases – over $2 billion through 15 auctions so far – have boosted liquidity in banks. "Lower savings certificate rates have made bank deposits more attractive, while competitive rates and innovative products are further driving deposit growth," he added.

Money outside the banking system declines

According to Bangladesh Bank data, the volume of currency outside banks fell by 5.5% year-on-year in August to Tk2.76 crore from Tk2.92 crore.

A senior central bank official said money held outside banks is gradually returning to the formal system, though not all of it has yet flowed back.