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Bank deposit growth rises to 11.4pc in July

Staff Correspondent | Published: 23:25, Sep 15,2020

 
 

The growth in deposits in the country’s banking sector increased to 11.4 per cent in July, the first month of the current fiscal year, when people started returning to their regular activities defying the coronavirus-induced risks.

The rise in deposit growth came after a consistent decline in growth from February this year.

The growth stood at 11.4 per cent in July from 10.61 per cent in the previous month, showed a Bangladesh Bank data released on Tuesday.

In January this year, the growth in bank deposits was the highest, 12.9 per cent, in the fiscal year 2019-2020.

Even though the impact of the coronavirus outbreak was intense in July, the disbursement of loans to the businesses, as part of the implementation of the government-announced stimulus packages, and gradual restoration of trade and investments after the withdrawal of countrywide shutdown were the two major factors behind the improvement in deposit growth in the banking system, said bankers.

The deposit growth rate was 11.88 per cent in April this year, but the rate declined in May and June to 11.36 per cent and 10.61 per cent respectively.

The deposit growth increased in July as savers returned to banks after the countrywide shutdown was withdrawn on May 30, said Standard Bank managing director and chief executive officer Khondoker Rashed Maqsood.

He said that still savers had no option but banks to park their deposits.

‘Although the present situation on the country’s stock market has changed positively but it will take time to restore the confidence of investors. As a result, banks are the ultimate goal for servers even though the interest rate is on the decline,’ he added.

Many clients of banks could not pay their instalments against monthly saving schemes from March to May as a huge number of people lost their jobs and income but now the situation has changed despite high infection rates of COVID-19, said Association of Bankers, Bangladesh (ABB) secretary Rahel Ahmed.

Banks faced deposit withdrawal pressure from March to June as panic gripped clients amid the coronavirus outbreak that impacted adversely bank deposits, he said.

Rahel, also the managing director of Prime Bank, observed that the deposit withdrawal trend was minimised now as people had been going back to business.

Bankers and economists said that high growth in remittance also contributed to the rise in deposit growth.

People earned more money in the form of remittance but they have not spent the entire earnings, they added.

The tighter rules and regulations the government has imposed on investment in the national saving certificates encouraged most of the savers to keep their money in banks even though the interest rates against deposits in the banks have been on the decline after the imposition of 9 per cent lending rate cap from April 1 this year, said a senior official of a private commercial bank.

The government in the budget for the previous fiscal year imposed a 5-per cent tax at source on interest income from NSCs worth up to Tk 5 lakh. It also levied 10 per cent tax at source for investment in schemes above Tk 5 lakh.

According to new rules imposed by the government, those investing in the savings tools should submit their electronic taxpayer identification numbers (e-TIN) and national identity cards (NID).

If the amount is more than Tk 1 lakh, they must pay the money through bank cheques.

The tighter rules and regulations are in force in the current fiscal year.

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