Banks not getting deposits as lure of savings bonds high

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Golam Mowla
Published : 07:30, Jun 20, 2019 | Updated : 07:30, Jun 20, 2019

In the first three months of this year, January-March, deposit has risen by Tk. 401.7 billion. In this time, national savings bonds worth Tk 150 billion were sold. Since enough deposit is not being made, some banks have taken aggressive moves; several banks have increased interest rates but are not getting deposits. A large part of the deposit is going to savings bonds.
Bangladesh Bank says that in the first three months of this year, January-March, deposit has risen by Tk. 401.7 billion. In this time, national savings bonds worth Tk 150 billion were sold.
Senior resource fellow of Centre for Policy Dialogue, CPD, Toufiqul Islam, said: “In recent times, banks are facing liquidity crisis which may exacerbate in the future.”
Since interest in national savings bond is higher, people are tilting towards them instead of keeping money in the banks.
Apart from state owned banks, most do not have money for investment. Desperate to get deposit, some are giving 14 per cent interest to get new deposits. Some banks are saying they will give double the amount deposited in five years.
MD of a private bank, said: “Due to high interest, people are tilting towards savings bonds; 25-30 per cent of liquidity has gone into saving bonds.”
In addition, due to default loan, a lot of money is stuck.
At the end of March, total deposit stood at Tk 1.12 trillion but in December it was Tk 1.11 trillion. In three months, deposit rose by 0.36 percent, which is Tk 40.17 billion.
In contrast, in the first six months of 2018, deposit rose by Tk 542.41 billion, followed by Tk 568.65 billion in the following six months.
Despite restrictions, the sale of savings certificates has not fallen; till March, 2018-19, bonds worth Tk 680 billion were sold.
Bangladesh Bank has also noted slowing down of loan growth. Last December, it was 14.07 percent which fell to 13.15 percent in March.

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