Deposits in full-fledged Islamic banks in Bangladesh declined for the second consecutive quarter, falling to Tk 388,507 crore in October-December 2024, the lowest since April-June 2023. This represents a 4% year-on-year drop from Tk 403,850 crore. In contrast, deposits in Islamic banking branches and windows of conventional banks grew by 30% year-on-year to Tk 51,252 crore. The decline in full-fledged Islamic bank deposits is attributed to governance concerns and depositor distrust, exacerbated by board restructuring in 11 banks. Despite Bangladesh Bank providing Tk 24,000 crore in liquidity support, excess liquidity stood at Tk 9,435 crore, up from Tk 163 crore in September but 15% lower year-on-year. Experts suggest confidence remains fragile due to governance issues and loan scams. While the central bank has taken measures to stabilize the sector, depositors continue shifting funds to conventional banks, reflecting a lack of trust in troubled Shariah-compliant banks.
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