12:00 AM, August 19, 2014 / LAST MODIFIED: 01:53 AM, March 08, 2015

Bank deposits mount despite rate cuts

Bank deposits mount despite rate cuts

Rejaul Karim Byron

Bank deposits rose 15.81 percent year-on-year in fiscal 2013-14 despite the cuts in interests on savings in the past one year.
On June 30, the total deposit in the banking sector stood at Tk 668,358 crore, with private banks accounting for 63.88 percent of the sum, according to data from the central bank.
The private banks saw their deposits grow 17.56 percent, the state-owned commercial banks 13.68 percent, foreign banks 7.18 percent and the government-run specialised banks 14.81 percent.
But it was Islamic banking that saw its deposits increase the most -- by 23.03 percent -- between June 30 last year and this year.
Khondker Ibrahim Khaled, a former deputy governor of the Bangladesh Bank, said the GDP grew more than 6 percent, which brought about an increase in people's income and eventually the banks' deposits.
Zaid Bakht, research director of the Bangladesh Institute of Development Studies, said the sluggish phase of the share market is tempting people to put their money in savings instruments or banks.
“But with savings instruments, there are some limitations. So it is the banks who are the biggest beneficiaries of the stock market's depressed phase. They still provide 9 to 10 percent interest rates.”
The average interest rate on savings stood at 8.01 percent in May, down 0.60 percentage points from July last year. A high official of the central bank said the figure dipped below 8 percent in June.
Nurul Amin, managing director of Meghna Bank, echoed the same, adding that many people in rural areas have opened Tk 10 accounts taking advantage of the financial inclusion wave taking place right now.
The poor are saving in those accounts, he said, adding that banks have been opening branches in rural areas of late, which is also helping the cause.  
The Meghna Bank MD said another reason for the rise in deposit is the sluggish investment scenario: many businessmen are keeping their investable fund in fixed deposits in banks.


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