The banking sector in the country is overwhelmingly concentrated in urban areas, leaving rural regions with a disproportionately smaller share of deposits and loans.
Higher economic activity, greater population density, and a stronger business presence in cities have led to a widening financial gap between urban and rural areas.
As banks continue to focus on urban markets, rural communities struggle with limited access to formal banking services, exacerbating economic disparities.
According to Bangladesh Bank data, over 84% of total bank deposits come from urban customers, while rural customers contribute just 16%. This means urban customers provide more than five times the deposits of their rural counterparts.
A recent report reveals that as of December 2024, total deposits in the banking sector stood at Tk18,83,711 crore. Of this, rural deposits accounted for Tk2,92,422 crore, whereas urban deposits stood at Tk15,91,288 crore.
Similarly, total loans in the banking sector during the same period amounted to Tk16,82,877 crore, with rural areas receiving just Tk1,37,247 crore in loans, compared to Tk15,45,630 crore disbursed in urban areas.
Rural banking remains underdeveloped
Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development (InM) and former chief economist of Bangladesh Bank, told the Daily Sun that rural-to-urban migration is one of the key factors behind this imbalance.
"As people migrate to cities in search of better job opportunities, education, and healthcare, the demand for banking services in rural areas declines. With a shrinking rural population, banks are less inclined to expand their presence in these regions," he explained.
Additionally, rural economies are heavily reliant on agriculture, which faces multiple challenges, including fluctuating crop prices, climate change, and declining profitability. Farmers and small businesses often struggle to repay loans, making banks cautious about lending in rural areas.
This reduction in credit availability further slows economic activity in villages.
Dr Zahid Hussain, former lead economist at the World Bank’s Dhaka office, pointed to lower income levels and limited financial literacy as other major obstacles.
"Many rural residents still depend on informal financial services and cash transactions instead of formal banking systems," he noted.
"The growing adoption of digital banking and fintech solutions has also played a role, as people increasingly prefer mobile payment platforms over traditional bank accounts, reducing the need for physical bank branches."
Declining rural credit demand
Bankers have observed a sharp decline in credit demand in rural areas, exacerbated by the ongoing economic downturn.
While banks primarily offer agricultural loans in these regions, demand for such credit has also remained low.
The flow of credit to small and cottage industries, which had been on the rise in previous years, is now in decline.
As rural economic activity slows, incomes have fallen, leading to lower savings and, consequently, fewer deposits in banks.
Moreover, rural areas lack the economic vibrancy of urban centres. Most high-income individuals and large businesses are based in cities, leading to a natural concentration of deposits in urban areas.
Mymensingh division records lowest deposits
According to the central bank’s quarterly statistics of scheduled banks for the January–December period, the Mymensingh division had the lowest share of deposits, with just Tk30,766 crore.
In contrast, banks in the Dhaka division held the highest amount of deposits, totalling Tk11,49,779 crore.
The amount of deposits in the Chattogram division stood at Tk3,98,095 crore.
In Khulna, the figure was Tk80,079 crore, while Rajshahi recorded Tk77,627 crore. Sylhet’s deposit volume was Tk73,460 crore. Rangpur held Tk37,137 crore in deposits, and Barishal had Tk36,765 crore.
Sylhet lags behind in loan disbursement
Loan distribution in the Sylhet division was the lowest among all regions, with only Tk18,407 crore disbursed by banks.
Meanwhile, the Dhaka division led in loan disbursement, with local banks distributing Tk11,52,190 crore by the end of December 2024.
Despite the presence of large businesses, the Chattogram division did not see a significant volume of loans, recording Tk3,03,188 crore in disbursements.
The Rajshahi division recorded Tk64,519 crore in loans. In Khulna, Tk63,908 crore was disbursed.
In Rangpur, the loan volume reached Tk39,794 crore, while Mymensingh saw Tk21,892 crore. Barishal had the lowest loan disbursement among the divisions apart from Sylhet, with Tk18,976 crore distributed.
The figures highlight a deep-rooted financial disparity between rural and urban areas, raising concerns about inclusive economic growth.
Experts suggest that banks should adopt targeted financial strategies, including expanding rural banking infrastructure, promoting financial literacy, and increasing investment in rural industries to bridge this gap.
Courtesy: Daily Sun.
Bd-pratidin English/Tanvir Raihan
