The country’s banking sector saw deposits swell in July as savers turn away from putting money into the national savings instruments.
The growth in deposits leaped more than 12 percent year-on-year as of July 31, up from 11.48 percent a month ago, according to the central bank statistics.
Excluding inter-bank balance, all banks’ deposits rose to around Tk 12 trillion as of July 31 from Tk 11.81 trillion a month ago. The figure was Tk 11.20 trillion as of March 28. The deposit growth was 11.07 percent as of December 31, 2018.
“Some savers are now switching over to banks from savings certificates,” a senior executive of a leading private bank told the FE on Thursday explaining the recent uptrend in banking deposits.
He also said the private banks, particularly the fourth generation lenders, are now offering double-digit interest rate to attract term deposits from individuals to meet their growing requirements for cash.
The banks are now offering interest on fixed deposit schemes, particularly of three-month, six-month and one-year, at rates ranging from 2.0 percent to 11.50 percent, according to the central bank’s latest monitoring report.
“The ongoing upward trend in government borrowing from the banking sector may continue in the coming months if the lower sales of savings certificates prevail,” the private banker noted.
Meanwhile, the net sales of national savings tools plunged by more than 57 percent to Tk 21.60 billion in July 2019 from Tk 50.36 billion during the same period of the last calendar year.
It was Tk 32.08 billion in June this year, according to official figures.
The net sales of saving certificates dropped drastically during the period as the government imposed tax along with some conditions on purchasing savings instruments.
Under the conditions, providing tax identification number (TIN) has been made mandatory for buying the tools if the amount exceeds Tk 100,000.
Buyers now require doing all transactions of savings tools through banks.
Also, the government has already developed a database of small savers to watch if there is anyone crossing the investment limit or making fictitious investments.
Talking to the FE, a senior official of the Bangladesh Bank (BB) said higher inflow of remittances in recent months also helped improve deposit growth in the banking sector.
He also expects the upward trend in deposits to continue in the coming months.
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