In the fourth quarter (October-December) of 2024, the weighted average interest rates on both deposits and advances increased, driven by liquidity shortages in some banks. To attract deposits, banks offered higher interest rates, leading to a rise in the average deposit rate to 6.04%—a 2.7 percentage point increase from the previous quarter. Consequently, total deposits (excluding interbank items) grew by 3.2% to Tk. 18.84 trillion, despite sluggish lending growth due to weak private sector demand. The weighted average lending rate rose to 12.05%, reflecting increased borrowing costs. State-owned, domestic private, foreign, specialized, and Islamic banks all saw varied deposit and lending rate shifts, with Islamic banks offering some of the highest deposit rates. The liquidity crisis, linked partly to fund mismanagement by business groups, led to deposit withdrawals and forced several banks to seek emergency liquidity support from Bangladesh Bank. Bankers predict that the upward trend in interest rates will persist in Q1 2025, with some banks remaining aggressive in attracting deposits for survival.
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