Money outside the country’s bank vaults was growing until latest official data available, signifying that depositor trust in the banking sector has not yet revived fully.
According to statistics, the volume of currency outside the banking system had grown over 13 per cent until June last.
Money-market analysts have said the volume of deposits that flew out of the banks’ vaults continued to rise significantly in recent months due mainly to trust deficit as weak financial condition of a number of banks come to the media spotlight that shakes confidence of the depositors.
On the other hand, they think, the real interest income against the deposits in many cases, particularly in the compliant banks, comes below inflation rate, which might prompt many of the depositors to look for alternative areas instead of the banks.
According to latest statistics with Bangladesh Bank (BB), the volume of currency outside the banks came to Tk 3.36 trillion by end of June last, Tk 400-billion higher from the figure of Tk 2.96 trillion recorded a year ago.
Even in December last, the figure was Tk 2.75 trillion. Since then, it had grown to Tk 2.83 trillion, Tk 2.86 trillion, Tk 3.03 trillion, Tk 3.0 trillion and Tk 3.49 trillion in January, February, March, April and May respectively.
Seeking anonymity, a BB official has said the volume of mattress money dropped by over Tk 120 billion in a month from May’s record count of Tk 3.49 trillion but the volume still much higher than that of the tolerable or normal level.
He said the central bank takes various regulatory steps to bring back the deposits into the banking system through stabilising the sector. “We’re hopeful that the volume will decline gradually in the coming days.”
Managing Director & CEO, NRBC Bank, Dr Md. Touhidul Alam Khan opines that the surge in cash outside Bangladesh’s banking system is not merely a liquidity issue — it is a profound crisis of trust.
Years of “governance failures”, mounting non-performing loans, and highly publicized scandals, including leadership turmoil at major institutions, have fundamentally eroded public confidence.
“When depositors witness banking irregularities or struggle to access their own funds due to withdrawal limits imposed by cash-strapped banks, panic takes hold. The result is a rational, self-preserving response: they withdraw their savings and keep them at home rather than risk institutional collapse,” he said.
Simultaneously, the seasoned banker said, persistent inflation has forced lower- and middle-income families to liquidate savings just to meet daily expenses, keeping cash in active circulation rather than deposited in banks.
The harsh reality is that even when depositors lose faith in one bank, they are not moving funds to stronger institutions — many top-tier, well-governed banks lack the branch presence in rural and suburban areas where trust has collapsed.
“This crisis demands collective accountability: comprehensive banking-sector reforms, restored public confidence through transparent governance. Without urgent, systemic intervention, we risk a prolonged detachment of the public from the formal financial system — a scenario no economy can afford,” he added.
Managing Director and Chief Executive Officer of Mutual Trust Bank (MTB) Syed Mahbubur Rahman has noted that the deposit rates in many well-governed banks fall below the prevailing inflation rate, thereby rendering the real income of depositors negative.
“It might prompt many of the depositors looking for alternative areas like lands. This may be a reason apart from trust deficit,” said the experienced banker.
Director-General of Bangladesh Institute of Bank Management (BIBM) Dr Md. Ezazul Islam said the volume of mattress money increased remarkably in May last probably for Eid-ul-Azha when a large number of people withdrew deposits to finance sacrificial animals.
In the following month (June 2026), the country saw severe protest over the leadership in Islami Bank and it led to massive cash withdrawal from the country’s leading shariah-based bank.
“That’s probably the reason behind the buildups of mattress money. But the good part is the figure starts dropping,” the economist added.
Source: https://thefinancialexpress.com.bd/economy/mattress-money-growth-means-lax-depositor-trust-revival
