Withdrawal of the interest rate spread limit and lending cap by the central bank has enabled commercial banks to raise interest rates on deposits. There is also liquidity crunch in the banking sector due to enhanced government borrowing. No wonder that some banks have been offering very high interest rates ranging from 12 to even 13.40 per cent to woo depositors. The fallout from this development is that investors including common depositors, who earlier lost their interest in savings due to low interest rate on deposits vis-à-vis high inflation in the market, have again started to turn their attention to banks to keep their money there. Obviously, commercial banks have been hugely profiting out of this change in the depositors' mindset. So far so good. But question remains. How, for instance, are the commercial banks operating across the country and benefiting out of the increased deposits from the public are reciprocating through proportionate amounts of lending in those parts of the country?
Reports coming from different parts of the country, however, tell a different story. In the case of Sylhet, for example, a region rich in natural resources and with immense potential for business activities and attendant economic growth is being deprived of its due share of investment from the banks. Ironically, according to an exclusive report carried by this paper in its Monday, March 18 issue on the state of the banks' contribution to this part of the country by way of lending is hardly reassuring. In fact, as far as the advance-to-deposit ratio (ADR) goes, Sylhet division is not getting back as bank loans even 30 per cent of the money the public of this region deposit in banks. As usual, the banks are shy of lending money to businesses, especially to the small and medium scale entrepreneurs (SMEs). In this connection, the Bangladesh Bank (BB)'s statistics on the division's bank deposit profile may act as a guide.
Last year, for instance, the different commercial banks operating in the four districts of Sylhet division collected Tk 696 billion as deposits. But when it comes to the volume of investments in the form of bank loans to individuals and business, the amount is rather stingy at Tk 200 billion. By simple arithmetic, the lending to deposit ratio, or ADR, comes to 0.29, the lowest one compared to all other divisions of the country. Compared to the lending of Tk10.72 trillion for Dhaka, Chittogram's Tk7.70 trillion and then Rajshahi, Khulna, Rangpur and Mymemsigh's shares in order, Sylhet preceding only Barishal has practically been denied a fair share of the colossal amount of credit amounting to Tk15.38 trillion that the scheduled banks across the country extended to individuals and businesses as loans until December, 2023.Worse yet, the people of the division in question are not getting, as noted in the foregoing, the due share of the money they saved in the banks as loans. To be fair, it is also not this particular region that is being thus deprived of formal credit from banks in this manner.
Sylhet may have its own idiosyncrasies regarding the work culture and investment habit of its residents attributable to its poor ADR in banks. But considering the investment potential of the region, should the banks as a source of formal credit not play a proactive role by attracting the pubic to the various services they (banks) have on offer? It is time the banks shook off their age-old rigidity and played an active role in promoting business in areas they operate.
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