The outflow of deposits from banks in response to trust issues and near-negative savings returns appears to be reversing, with funds returning to the banking system. The reduction in currency outside the banks in July 2023 has been a significant factor in this trend. The introduction of the SMART (Six-Month Moving Average Rate of Treasury Bill) reference rate has allowed banks greater flexibility in setting deposit rates, attracting potential depositors back to the banking channel.
Data from the Bangladesh Bank shows that the volume of currency outside banks decreased from Tk 2.92 trillion in June 2023 to Tk 2.66 trillion in July. Commercial banks have responded to this positive shift by raising both deposit and lending rates in accordance with the SMART rating paradigm. Some banks are now offering deposit rates as high as 9.0 percent. This return of depositors to the banking system is seen as encouraging, with the total deposit volume increasing by 9.69 percent in July 2023 compared to the previous month.
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