Deposits in Bangladesh's banking sector dropped by nearly 1.0 per cent during the July-September 2024 period, the first quarter of the FY 25, compared to the preceding quarter, according to Bangladesh Bank statistics.
The sector also saw loans and advances decrease by 0.87 percentage point during the same period.
Total deposit liabilities decreased by Tk134.98 billion, or 0.73 per cent, to Tk18.253 trillion at the end of September 2024, down from Tk18.388 trillion in the April-June quarter, as per the central bank report.
Banking industry insiders attributed the decline to high inflation, which has forced many to withdraw their deposits to meet rising living costs.
"Inflation is the key culprit as the prices of essential goods have surged significantly, leaving many depositors with no choice but to withdraw their hard-earned money from banks," said Syed Mahbubur Rahman, managing director and CEO of MTB PLC, a private commercial bank.
"There are many clients who have withdrawn money to compensate for the price surge in the market," he added.
Mr Rahman noted that panic about the safety of funds in banks, fueled by rumours, has contributed to the fall in deposits.
The deposit decline breakdown according to the bank types is as follows: private banks: 0.33 per cent, state-owned banks: 2.59 per cent, specialised banks: 0.43 per cent and foreign banks: 0.41 per cent.
Despite the quarterly decline, total deposits at the end of September 2024 registered a 6.55 per cent year-on-year increase, rising from Tk17.131 trillion in September 2023 to Tk18.253 trillion.
The data revealed that urban areas account for 85 per cent of total deposits, while rural areas contribute the remaining 15 per cent.
During the period, the deposit breakdown was: fixed deposits: 46.49 per cent or Tk 8.485 trillion, savings accounts: 20.95 per cent or Tk3.823 trillion and current accounts: 8.43 per cent and special notice deposits: 8.87 per cent.
Of the total deposits, private sector deposits made up nearly 83 per cent of the total, with the public sector contributing 17 per cent.
Dhaka division contributed nearly 61 per cent of total deposits, followed by Chattogram with 21.24 per cent. Other divisions' shares were: Khulna and Rajshahi: Over 4.0 per cent each, Sylhet: 3.89 per cent, Barishal and Rangpur: 1.95 per cent each and Mymensingh: 1.63 per cent.
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