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Banks in Bangladesh saw slower deposit growth last year mainly due to high inflation, the people’s confidence crisis regarding some banks and a crackdown on money laundering, according to officials of the country’s central bank.
Bank deposits registered an average annual growth rate of 7.69 percent by the end of 2024 while it was 10.15 percent the year prior, showed data of the Bangladesh Bank.
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They said that although most banks are offering high interest on savings, the deposit growth declined last year as many small and individual customers withdrew their money to cover essential expenses amid high inflationary pressure.
They added that loan and deposit rates have been rising ever since the central bank removed the single-digit ceiling on lending in an effort to curb inflation in the country.
Inflation in Bangladesh has hovered above 9 percent since May 2023, and stood at 9.32 percent in February this year.
The central bank officials also said that general savers have lost their trust in a number of banks, such as those led by the controversial business conglomerate S Alam Group. Additionally, scam-hit lenders faced massive withdrawal pressure after the political changeover on August 5, 2024.
Afterwards, the Bangladesh Bank had to inject fresh funds into those weak banks to help address the ensuing liquidity crisis.
On the other hand, politically affiliated individuals and those with black money withdrew their funds from the banking sector as panic spread among them due to the recent government crackdown.
Following the political changeover, the bank accounts of 366 individuals and entities, with a combined balance of Tk 15,000 crore, were frozen between August and December last year for their alleged involvement in money laundering.
Central bank data also showed that currency outside the banking sector amounted to about Tk 276,371 crore by the end of 2024, up from Tk 254,860 crore the previous year.
However, Sonali Bank, BRAC Bank, Citizens Bank, Midland Bank, MTB, NCC Bank, ONE Bank, Prime Bank, Pubali Bank, Shimanto Bank, City Bank, Bank Asia, Eastern Bank PLC, Jamuna Bank, Trust Bank, and Mercantile Bank were among those that saw good deposit growth last year.
Deposit growth in the banking sector stood at just 4.99 percent in 2022 whereas it was 9.67 percent in 2020, as per central bank data.
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