During the July-March period of the current fiscal year, time deposits in Bangladeshi banks surged by Tk 865.9 billion, reaching Tk 14.82 trillion. This increase is mainly due to rising interest rates under an uncapped interest regime, which began in July with the introduction of the new SMART benchmark for bank lending. This change boosted both deposit and lending rates.
In contrast, demand deposits, primarily in savings accounts, grew more slowly at a single-digit rate, totaling Tk 1.94 trillion. In March, the weighted average interest rate on all deposits was 5.2% in banks and 9.2% in non-bank financial institutions, up from 4.4% and 7.9% respectively in June 2023.
Higher interest rates on fixed deposits have attracted capital market investors, who are withdrawing funds from the underperforming share market. There are also significant investments in government treasuries. Some banks, facing liquidity shortages, are offering interest rates above 10% for term deposits, with a few offering around 12% for one-year deposits.
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