Bank deposit growth slows to 8pc in June

Even as interest rates remain high, there hasn’t been any improvement in the deposit growth, which remained below 8 per cent at the end of June.

According to the latest data from Bangladesh Bank, the growth rate for deposits in the banking sector at the end of June was 7.77 per cent, the same rate as in May. In April, the rate had stood at 8.21 per cent, while in March it was 8.51 per cent, reports bdnews24.com.

Many banks are currently offering soaring interest rates of 9-11 per cent on deposits. Several banks facing a liquidity crunch are running campaigns that offer interest rates of up to 13 per cent on deposits. However, these incentives have yet to drum up depositor interest to any significant degree.

Bankers and economic analysts point to rising inflation cutting into family budgets and liquidating previous savings. Slowdowns in business and commerce are also reining in liquidity flow.

According to the central bank, total deposits in banks increased to Tk 18.77 trillion by the end of June 2025, compared to Tk 17.42 trillion in the same month in 2024, growing 7.77 per cent year-on-year.

Bank deposit growth has slowed since September 2024, when it fell to 7.26 per cent. Since then, the rate has fluctuated, but has not reached double digits.

Zahid Hussain, lead economist at the World Bank's Dhaka office, sees the stagnation of the overall economy as the main reason for the decline in bank deposits.

The main driver of the current growth in deposits is the good inflow of remittances, he says. Otherwise, the rate would have been even lower.

Zahid pointed to increasing unemployment, lack of growth in people's income, decrease in new businesses and trade, and stagnation in investment as major issues affecting deposit growth.

If there is no new business or trade, the import of capital equipment decreases. Unemployment also increases because of the impact on employment.

According to Bangladesh Bank data, the import of capital equipment fell by 25.41 per cent in June.

Zahid said, "There is no big change in people's income. If business and trade are strong, current deposits increase. And if income is good, 'fixed deposits' increase."

The analyst says that if the economy does not turn around, then deposit growth – a key economic driver – will remain stagnant.

NRB Bank Managing Director Tarek Reaz Khan also believes business is not growing as expected. He says that this, along with inflationary pressure, is having a major impact on deposit growth.

“In addition to the high inflation, business and trade are not growing much. That is why the growth in deposits is low. Moreover, private sector growth is low. But, if it continues to increase, we can expect that deposit growth will pick up again.”

According to the information provided by Bangladesh Bank, private sector growth fell to 6.49 per cent at the end of June.

This slowdown is mainly due to high interest rates on bank loans, uncertainty about politics, and the government’s ongoing contractionary monetary policy.

Regarding the lack of improvement in deposit growth, Bangladesh Bank Governor Ahsan H Mansur cited money laundering as the main cause during several press conferences and events in May.

He said that the laundering of dollars had taken a chunk of money out of the banking channel, creating a money crisis. Because of this, banks are not able to increase deposit growth even when they offer high interest rates on deposits.