Bank deposits in April rise by 25,000C

Deposits in Bangladesh’s banks rose by about Tk25,000 crore in April, even amid 9% inflation rate in the last few months.

However, deposits in Islamic banks did not increase, rather the amount of excess liquidity in a number of such banks dropped in the first quarter of this year.

According to Bangladesh Bank data, the total amount of bank deposits stood at Tk1,548,000 crore at the end of April, which was Tk1,523,000 crore in March.

The bulk of the increased amount — around Tk20,000 crore — in April was time deposits of various tenures, while the rest were demand deposits.

According to the central bank, the deposit growth in April was a 10-month high of 8.54%.

Earlier, deposit growth fell below 6% in December last year due to irregularities in loan disbursements in a number of Islamic banks.

However, the growth rate has been increasing since then.

The total amount of loans disbursed by banks in April rose by Tk6,576 crore to Tk1,435,000 crore, compared to the previous month, according to the central bank.

Earlier, LCs involving around $7 billion were opened per month on an average, but currently it has come down to $4-5 billion.

Besides, investment in the country is dropping due to the hike in fuel, gas, and electricity prices.

The growth of customer deposits in the country’s banking sector has increased significantly, but the flow of deposits and excess liquidity in Shariah-based banks have decreased significantly, according to the central bank’s report on “Developments of Islamic Banking in Bangladesh (January-March 2023)”.

According to central bank data, deposits in Islamic banks increased by Tk5,170 crore or 1.38% in the January-March quarter of 2023 as compared to the same time previous year.

The deposit growth rate at the Islamic banks during the same quarter in the years from 2018 to 2022 period was over 15%.

The amount of loans disbursed by the Islamic banks increased by 13.45% or Tk46,011 crore in the first quarter of this year, which was the highest compared to that in the same period of the last four years.

According to the central bank’s report, the drop in Islamic banks’ excess liquidity in the first quarter of this year was the biggest in the last five years.

Excess liquidity in Islamic banks at the end of March 2022 was Tk25,137 crore, which has come down to Tk1,990 crore at the end of March this year — a 92% drop.