Deposits in the country’s banking system have increased notably, suggesting renewed public confidence after months of uncertainty triggered by inflation, political instability, and irregularities.
As of March 2025, total deposits in the country’s banking sector stood at around Tk18,18,143 crore, compared to Tk16,75,492 crore during the same month a year earlier. This reflects an 8.51 percent year-on-year growth – the highest in seven months – according to data from the Bangladesh Bank.
Experts see this rebound as a sign that measures taken by the central bank and attractive interest rates are beginning to yield results.
Dr Zahid Hussain, former lead economist at the World Bank’s Dhaka office, views the current growth as a welcome sign but warns that challenges still remain.
“The banking sector has been under pressure due to inflation, political unrest, and a loss of public trust from corruption and irregularities,” he said.
“However, recent initiatives by the Bangladesh Bank have helped restore confidence, leading to a gradual rise in deposits.”
Dr Hussain noted that households still face financial stress due to inflation and rising living costs, which continue to limit deposit growth. However, he believes that if the current policy momentum continues and the economic environment stabilises, growth will improve.
AB Mirza Azizul Islam, former adviser to the caretaker government, noted that in Bangladesh, people have few alternatives outside the banking sector for saving or investing.
"The stock market has remained volatile for several months, making it a less attractive option for many. While savings certificates are considered safe, they often require extensive documentation, which can be a barrier for the average person. As a result, most people feel more comfortable keeping their money in banks, where the process is simpler and perceived as more secure," he explained.
Mutual Trust Bank Managing Director and CEO Syed Mahbubur Rahman pointed to global economic crises in 2022 and 2023, followed by political instability in 2024, as major hurdles to deposit growth.
"People were hesitant to keep their money in banks due to rising inflation, declining foreign reserves, and fears about the stability of certain financial institutions," he said.
However, Rahman expressed optimism about the current trajectory. “With strong leadership from the central bank governor and rising deposit rates, we’re seeing a shift in public sentiment. Confidence is gradually returning, and the increase in deposits reflects that,” he noted.
Gradual rebound after months of sluggish growth
Deposit growth had been sluggish since September of the current fiscal year 2024-25, dipping to 7.26 percent. In the following months, growth hovered between 7.28 percent and 7.46 percent, before slipping slightly to 7.44 percent in December.
January saw a notable improvement with growth rising above 8 percent, but the rate declined again in February to 7.89 percent.
Despite the fluctuations, March’s rebound marks a return to a more encouraging trend, driven largely by rising interest rates offered by banks and initiatives aimed at stabilising the sector.
Interestingly, deposit growth had peaked at 9.50 percent in August 2024 – around the time the Awami League government was ousted amid nationwide political unrest.
Since then, confidence in the banking system had been dented, and deposits stagnated. March’s resurgence could indicate that a recovery is now taking hold.
Attractive interest rates drive deposits
A key factor behind the rise in deposits is the high interest rates now being offered by banks.
According to the Bangladesh Bank data, time deposits have become increasingly attractive, with some private banks offering returns as high as 12 percent – rates unseen in recent years.
The average interest rate in private commercial banks for fixed deposits with less than a one-year maturity now stands at 9.68 percent, while for deposits exceeding one year, including Deposit Pension Schemes (DPS), the rate is 9.74 percent.
Among private commercial banks, the AB Bank is offering the highest interest rate for deposits of less than one year at 12.06 percent, followed by the Citizens Bank 11.57 percent, EXIM 11.53 percent, the Bengal Commercial Bank 11.27 percent, and the Community Bank 11.14 percent.
For long-term deposits exceeding one year, the Citizens Bank leads with an 11.72 percent interest rate, followed by the Global Islami Bank 11.68 percent, the NRB Bank 11.55 percent, the Bengal Commercial Bank 11.45 percent, and the AB Bank (11.43 percent).
In contrast, state-owned banks offer significantly lower rates, averaging 8.90 percent for one-year deposits and 8.92 percent for longer terms.
Specialised banks offer around 8.01 percent for short-term and 7.99 percent for long-term deposits. Foreign banks offer the lowest rates, with just 7.43 percent for short-term and 6.73 percent for long-term deposits.
Source: Daily Sun
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