Kazi Zahidul Hasan :
Deposits at banks soared to 11.48 per cent to Tk 1,21,668 crore in last one year (from July 2018 to June 2019), as depositors rushed to park their savings driven by high returns and stringent rules on buying savings tools.
Lending by banks by this time increased by 12.38 per cent to Tk 1,07,647 crore outpacing the deposit growth, according to Bangladesh Bank.
However, the deposit growth brings a sigh of relief to the country’s banking sector, which has been suffering from liquidity crisis.
It also sent most banks’ advance-deposit ratio (ADR) in comfort zone, with ADR of 15 banks went beyond the safe limit.
Faced by liquidity crisis, a number of banks earlier jacked up interest rates to 12 to 14 per cent from 8-9 per cent, prompting depositors to invest in fixed term deposits. As a result, they saw the rise in their overall deposits, insiders said.
On the other hand, yields on national savings certificates are between 11 per cent and 12 per cent.
“An aggressive drive for liquid funds has finally pushed up the deposits easing liquidly pressure on banks,” Dr Salehuddin Ahmed, a former governor of Bangladesh Bank, told The New Nation on Tuesday.
He also said that the government imposed conditions and tax for subscribing savings certificates that also drove the people to park their deposits to banks. When asked, Dr Salehuddin Ahmed said, the change in the deposit rate of commercial banks indicates that the lending rate is unlikely to come down any time soon as their cost of funds has gone up significantly.
He mentioned that the banks were suffering from liquidity crisis due to high defaulted loans.
“The maturity period of a majority of fixed deposit accounts is one year. So, there are less chances of the lending rate coming down soon,” a senior banker told The New Nation yesterday on condition of anonymity.
Industry insiders said that bank interest rates now reached up to 18 per cent causing a rise in cost of doing business.
Out of the Tk 1,21,668 crore fresh deposits, banks have altogether received Tk 60,786 crore during April-June this year, according to Bangladesh Bank.
“It is good to see that bank deposits are gradually increasing. The latest development is expected to leave a positive impact on the banking sector,” Dr Ahsan H Mansur, Executive Director of the Policy Research Institute, told The New Nation.
He attributed fall in import, rate hike on term deposits and tightening grip of holding savings certificates to the sudden growth in bank deposits.
Dr Mansur mentioned that the deposit growth continued to fall in the last several years raising concern over the stability of the banking sector.
Deposit growth in the banking sector stood at 9.80 per cent in 2018, down from 10.60 per cent in 2017.
