Nonbanks saw a surge in deposits in a phenomenon that belied a drop in the number of accounts with them, as of the last April-June quarter.
Deposit accounts with the country's nonbank finance companies (NBFCs) fell over 11 per cent in the quarter compared to the previous quarter to March 2024, according to the latest report from Bangladesh Bank.
However, despite the decline in account numbers, total deposits grew by nearly 2.0 per cent during the period.
As of June, the central bank's statistics reveal that the number of deposit accounts stood at 0.3797 million. Meanwhile, total deposits amounted to Tk 45.12 billion, marking a growth of 1.83 per cent.
The decrease in deposit accounts was driven primarily by a decline in individual accounts, both male and female, across the country's 35 nonbank finance companies, formerly known as nonbank financial institutions (NBFIs).
Male individual accounts dropped over 14.5 per cent, totaling 0.2266 million, while female ones decreased by 8.2 per cent to 4,566.
These finance companies are authorised to collect fixed deposits from individuals and provide loans to support economic activities.
By a contrast to the decline in individual accounts, deposit growth from enterprises-both male and female-owned-has driven the overall increase in deposits with NBFCs.
Fixed deposits, which account for nearly 97 per cent of total deposits (Tk 43.75 billion), grew by approximately 2.0 per cent during this period.
Male enterprise deposits grew by 2.73 per cent to Tk 25.823 billion, making up 57.24 per cent of the total deposited funds.
Female enterprise deposits saw even a stronger growth, rising by over 5.0 per cent to Tk 6.368 billion.
Industry-insiders attribute this growth to a rising popularity of fixed deposit receipts (FDRs) among enterprises, as NBFCs generally offer higher interest rates than the banking sector.
Some experts also believe the decline in individual accounts may be due to underperforming finance companies, causing depositors to shift away from the industry.
Md. Golam Sarwar Bhuiyan, Managing Director of IIDFC or Industrial and Infrastructure Development Finance Company, told the FE that the rate of FDRs with finance companies is higher. "In my view, this is the main reason for the increase in deposit growth."
According to Bangladesh Bank data, the weighted average deposit rate for NBFCs was 9.98 per cent in July, while the lending rate stood at 13.01 per cent.
Mr. Bhuiyan also hints at another possible factor: some finance companies, facing liquidity challenges, have offered higher interest rates to retain deposits, even though they struggle to return deposits to clients on time.
As Chairman of the Bangladesh Leasing and Finance Companies Association (BLFCA), Mr. Bhuiyan notes that all companies are doing their best to attract deposits.
He also points out that government treasury bills and bonds are offering higher rates, which could be contributing to the decline in individual accounts with NBFCs.
Despite the increase in deposits, lending growth has remained weak or 0.5 per cent as business activities in the country continued to slow down.
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