Money withdrawn from banks during a prolonged period of panic is gradually returning to the banking system. According to the latest data from Bangladesh Bank, cash held by the public fell by about Tk4274 crore in October compared with September this year.
Bangladesh Bank’s most recent updated report shows that cash in circulation with the public stood at Tk2,74,724 crore in September, which declined to Tk2,70,449 crore in October. During the same period, printed currency or reserve money also fell by about Tk7309 crore.
During the tenure of the previous government, widespread irregularities, corruption and plundering severely eroded public confidence in the banking sector. Fearing for their savings, many people withdrew money from banks and kept it at home. As a result, banks faced acute liquidity shortages and struggled to mobilise deposits even by offering high interest rates. At that time, the amount of cash held by the public was increasing every month.
However, the situation has been gradually changing since August last year. In particular, from September last year to February this year, cash held by the public declined consistently. Although it rose temporarily in March, it has fluctuated since April and, after July, has again been falling steadily.
Professor Dr Mizanur Rahman of the Department of Economics at Manarat International University described the return of cash to banks as a very positive sign for the country’s economy.
He said money kept idle at home does not go into investment, whereas funds deposited in banks can be channelled into industry, business and employment generation. To sustain this renewed confidence, he stressed the need to stop irregularities and corruption in the banking sector, curb the issuance of fake loans, and recover money siphoned abroad. At the same time, he said, the central bank must become more transparent, noting that good governance in the banking sector is not possible without a strong and transparent regulator.
Bangladesh Bank Executive Director and spokesperson Arif Hossain Khan said that earlier, due to various problems, people withdrew money in panic. “Now the situation is normalising, fear among the people is easing, and they are returning to banks,” he said.
He added that to maintain public confidence in the banking sector, the central bank has instructed banks to strictly follow rules and regulations and has directed them to refrain from any activities that could undermine customers’ trust.
Source: Kaler Kantho
