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Banking sector in Bangladesh lost a whopping Tk 520.84 billion deposit in the second quarter of the current fiscal year, which is thought to have been invested elsewhere or gone to informal sector.
In the October-December quarter, total deposits in banks slumped to Tk 14,090.34 billion from Tk 14,620.19 billion in the first quarter of FY2021-22, according to a Bangladesh Bank report.
The central bank data suggests that during the first half of the current fiscal year bank, the deposits saw 46.59 percent negative growth against 51 percent growth in the first six months of the fiscal year.
Bangladesh Bank officials said the people parked their money at the banks during the pandemic as businesses and investment got stagnated.
But in the wake of waning the pandemic impacts, business and trade have made a turnaround while the investment has increased in the country.
As a result, the banking sector lost deposits, the officials added.
On the other hand, low interest rate on bank deposits also led to the money withdrawal for investing elsewhere, the central bank officials observed.
However, despite the fall in deposits, the banking sector still has Tk 2180 billion as extra liquidity, Bangladesh Bank data showed.
The recent fall in foreign remittances is seen as another reason behind the falling bank deposits.
Economic analysts have, however, different view about the huge amount of deposit loss. They see it as “unusual matter” and smell of capital flight.
The experts argued that the banking sector witnessed a huge flow of deposits during the pandemic as money could not go out because of sluggish global economic activities.
Experts said if the investments were made in formal sector, the money would ultimately come to the banking sector, but it did not happen.
Similarly, the money has not gone to the capital market or savings certificates.
The share market is now down in a sense whereas savings certificates sale dipped to Tk 95.90 billion during July-December compared to Tk 204.87 billion sale in the first half of FY2020-21.
So, the money is feared to go to informal sector or have been laundered abroad through illegal channels, which, some analysts said, might have caused a sudden rise in dollar price after resumption of economic activities. In the meantime, inward remittance declined by 20 percent or Tk 279.24 billion during July-February period in contrast to 34 percent surge in the same period a year earlier.
Some analysts came up with the view that many depositors are withdrawing their money from banks to meet increased cost of living after the spiral of commodity prices.
“Many people whose income did not increase are withdrawing their savings. Moreover, the deposit interest might have caused the situation,” observed Policy Research Institute (PRI) executive director Ahsan H Mansur.
(DS)
