After months of stagnation, bank deposit growth in Bangladesh finally crossed the 8% mark in January 2025, signaling a potential turnaround in the financial sector. The banking industry had been struggling with high inflation, a liquidity crunch, and eroding public trust, leading to subdued deposit growth for four consecutive months reportedly.
According to Bangladesh Bank data, deposits grew by:
7.26% in September 2024
7.28% in October 2024
7.46% in November 2024
7.44% in December 2024
The last time deposit growth was this low was February 2023, when it dipped to 6.86%.
Industry insiders point to several reasons behind the prolonged low deposit growth.
Loan Defaults & Liquidity Crises: Many banks have faced rising loan defaults and liquidity shortages, shaking customer confidence, according to Mashrur Arefin, Managing Director of City Bank.
Political & Economic Turmoil: The fall of the Awami League government during the mass movement of July-August 2024, along with dollar shortages, dwindling reserves, and declining remittances, created uncertainty in the banking sector.
High Inflation vs. Low Income Growth: With inflation hovering near 10% and income growth below 5%, people prioritized daily expenses over savings, limiting new deposits, explained a senior official at a state-owned bank.
Despite these challenges, the central bank reported a surprising 9.50% deposit growth in August 2024, even amid political unrest. However, growth remained below 10%, with October 2023 recording 9.80%.
Read more:Â Bangladesh Bank Eases Loan Exit Rules for Struggling Businesses
As of December 2024, total deposits in the banking sector reached Tk17.76 lakh crore, up from Tk16.45 lakh crore a year earlier.
A senior Bangladesh Bank official emphasized that for a developing economy like Bangladesh, deposit growth should ideally range between 12-14%, significantly higher than the current levels.
In a positive development, approximately Tk2,140 crore that was previously outside the banking system returned in January 2025. By the end of the month, total money held outside banks dropped to Tk2.74 lakh crore, slightly down from Tk2.76 lakh crore in December.
The managing director of a Sharia-based bank highlighted that over six lakh new accounts were opened in the last six months, with more deposits than withdrawals – a promising sign.
Banking leaders believe that if law and order improve and public trust in banks is restored, deposit growth could see further acceleration.
With more money flowing back into the system, industry experts remain cautiously optimistic that the banking sector will regain its much-needed stability in the coming months.
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