Banks’ deposits swell: Credit goes to stricter rules for investment in savings tools, higher inflow of remittance

The Daily Star  September 14, 2020

Deposits at banks rose 10.49 per cent year-on-year to Tk 1,305,453 crore in the last fiscal year on the back of tightening of rules around national savings certificates, record flow of remittance and rebounding economic activities.

State-run commercial banks’ deposit climbed 8.22 per cent to Tk 325,730 crore at the end of June when 40 private commercial banks had a combined deposit of Tk 885,921 crore, up 11.25 per cent year-on-year.

Nine foreign banks accumulated a base of deposit of Tk 61,482 crore, which is 13.55 per cent higher than in June last year, central bank data showed.

Md Abdul Halim Chowdhury, managing director of Pubali Bank, said a robust growth of remittance contributed to the healthy growth of deposits.

“People received more money in the form of remittance in recent months but they have not spent all of them because of the coronavirus pandemic. They saved the money,” said Chowdhury.

Bank Alfalah Bangladesh, a foreign lender based in Pakistan, pulled off the highest 44.33 per cent deposit growth last year, totalling Tk 1,172 crore.

Local lender Union Bank’s deposit grew 29.51 per cent to Tk 13,139 crore at the end of the last fiscal year while Shimanto Bank’s deposit expanded by 29.39 per cent to Tk 1,209 crore.

NRB Commercial Bank’s deposit was up 29.38 per cent to Tk 7,912 crore, state-run Rupali Bank’s deposit collection swelled by 25.05 per cent and the Commerce Bank of Ceylon, a bank from Sri Lanka, expanded its deposit base by 22.28 per cent.

The deposit of First Security, Padma, Premier, Brac Bank, Pubali, NRB Global Bank Ltd, City Bank, Islami Bank Bangladesh, NRB Bank, National Bank and Standard Chartered rose between 19.11 and 15.37 per cent, BB data showed.

State-run Sonali Bank was sitting on the highest amount of deposits of Tk 117,380 crore in the last fiscal year, up 6.59 per cent year-on-year.

Islami Bank Bangladesh came second with a deposit base of Tk 100,237 crore, also the highest among all private banks.

Agrani Bank has a deposit of Tk 74,189 crore, Janata Tk 68,936 crore and Rupali Tk 48,188 crore, Bangladesh Bank data showed.

Among the banks holding more than Tk 30,000 crore in deposits include First Security, Pubali Bank, National Bank, United Commercial Bank, Dutch-Bangla Bank and Exim Bank and Al-Arafah Islami Bank.

Among the foreign banks, Standard Chartered Bangladesh held the highest Tk 31,086 crore.

Six banks had a negative deposit growth in the last fiscal year.

BASIC Bank’s deposit declined 3.5 per cent, becoming the only state-run lender that faced a contraction.

Private commercial lender Dhaka Bank’s deposit went down by 4.92 per cent and Bangladesh Commerce Bank’s deposit fell 4.68 per cent.

Deposit of ICB Islami gave up 2.36 per cent, One Bank’s deposit shrank 2.45 per cent and Standard Bank’s deposit narrowed by 0.51 per cent.

The deposit of Habib Bank, headquartered in Pakistan, fell the most, by 8.64 per cent. Korean multinational lender Woori Bank’s deposit edged down 2.56 per cent.

State-run specialised lender Bangladesh Krishi Bank’s deposit rose 7.71 per cent to Tk 27,520 crore.

The government has tightened rules to curb the misuse of national savings certificates, prompting savers to return to banks, Chowdhury said.

Some people, lured by higher profit compared to the deposit products in the banking sector, had earlier invested heavily in the savings tools breaching the limit set by the Department of National Savings (DNS).

Savers of the national savings certificates now have to require a tax identification number to invest in the tools as well.

The government also monitors the investment in the saving tools through an online management system, which is another reason behind the fall in the investment in the segment.

Between July and March, the net sales of savings instruments stood at Tk 11,203 crore, down 71.80 per cent year-on-year, according to data from the DNS.

The postal savings scheme and the postal banking system have also been automated.

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