Deposits in Islamic banking accounts are declining due to a crisis of confidence among savers, exacerbated by liquidity issues resulting from loan irregularities. Total deposits in Islamic banks and their branches in conventional banks fell by Tk 8,495 crore (2 percent) from December to Tk 413,969 crore in January, as per Bangladesh Bank data. The fully-fledged Islamic banks were the hardest hit, with deposits decreasing by Tk 8,832 crore. Despite this, Islamic banks lent Tk 4,869 crore in January. High interest rates on treasury bills and bonds have diverted investors away from banks. Six Islamic banks, including Islami Bank Bangladesh and Social Islami Bank, face liquidity shortages and regulatory issues, affecting staff salaries. Bangladesh Bank is providing liquidity support to these banks.
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