The growth in deposit in the country’s banking sector increased to 12.88 per cent in November last year as savers returned to banks after the government in the budget for the 2019-2020 fiscal doubled tax on interest earnings from the national savings certificates.
Besides, automation of the NSC sales system prevented a section of savers including institutions and high net worth individuals from purchasing NSCs beyond the allowable limit.
As a result, those high net worth individuals and entities channelled their funds into bank deposits, Bangladesh Bank officials said.
Bankers and economists, however, cautioned that the deposit growth might face a slowdown in the coming days as the bankers have recently agreed to bring down interest rate against deposits to 6 per cent from February 1.
The decision was made as part of the government’s initiate to bring down lending rate to 9 per cent from April 1.
In October last year, the deposit growth was 12.19 per cent.
In November of FY20, deposits in the banking sector stood at Tk 11,19,487.9 crore, increasing by Tk 1,27,797.5 crore from Tk 9,91,690.4 crore at the end of November of FY 2018-19, as per BB data.
Since April, 2017, the deposit growth in the country’s banking system has remained below 12 per cent with the lowest of 8.57 per cent in April, 2018.
BB officials said the launch of the NSC online management system and the increased rate of source tax on savings tools had contributed to the sharp drop in NSC sales in the first four months of this fiscal year.
In July-November of FY20, the government’s net sales of NSCs dropped by 73.03 per cent to Tk 5,841.64 crore from Tk 21,661.93 crore in the same period of FY19.
Apart from that, the government’s borrowing from the central bank against treasury bills and bonds also helped improve the deposit situation in the banking sector, said BB officials.
The government in the first three months of FY20 borrowed Tk 4,539.4 crore from the central bank by issuing treasury bills and bonds.
The government’s borrowing from the BB helped the central bank return the money, which it had received earlier against the sales of the US dollars in the local market, to the banking channel and bring some ease in the money circulation, officials of the central bank said.
In July, the growth rate increased to 10.69 per cent after falling to 9.93 per cent in June of 2019. The growth rate increased to 11.40 per cent in August and 11.88 per cent in September.
In December, 2018, the deposit growth in the banking sector had dropped to 9.04 per cent.
Although the deposit growth increased a bit, the private sector credit growth dropped to 9.83 per cent in December last year, the lowest after 2008.