Cash flowing back into banks

The currency is flowing back into banks, driven by rising deposit rates and growing confidence in the well-performing institutions, after a surge in cash outflow from the banking system for about a five-month period.
Bangladesh Bank data showed that currency outside the banking system fell by Tk 57.43 billion to Tk 2.778 trillion in October 2024 from the previous month (September).
Bankers attributed the trend to a slight improvement in depositors' confidence, following months of instability.
Deposits in the banks rose to Tk 17.6 trillion in October, marking an increase of nearly 1.0 per cent from September.
Despite the improvement, the October amount of cash outside banks remained significantly high year-on-year compared to 2023.
The surge in withdrawals early this year was linked to widespread irregularities in the banking sector during the ousted government of Awami League.
Bankers said public trust in the banking sector had eroded due to massive loan scandals and irregularities in several banks during Sheikh Hasina's government.
Rising living costs further exacerbated the situation then, prompting many people to hold more cash in hand.
"This is a piece of good news that people are depositing their hard-earned money despite the rate of inflation remaining stubbornly high in the economy," said a senior central banker.
He further expected to witness inflow of more money into the banks in the coming months.
The rate of inflation remained persistently high, exceeding 10 per cent, for months. In November, it rose to 11.38 per cent with food inflation reaching 12.8 per cent.
Fixed- and low-income households, in particular, have been struggling to meet basic needs as the prices of commodities continue to soar, leading to higher withdrawals than deposits.

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