Bank deposits have posted a 2.14% or Tk27,161 crore fall in the July-September period despite showing notable growth in the second quarter.
According to data released by the central bank on Thursday, as of September this year, the deposits stood at Tk12.37 lakh crore from Tk12.64 lakh crore in June.
In the April-June quarter, the deposits increased by Tk53,669 crore in contrast to the January-March quarter's.
While talking to The Business Standard, Dr Salehuddin Ahmed, former governor of the Bangladesh Bank, pointed out a number of reasons for a fall in the deposit growth.
"Many people have suffered income erosion, while many others have lost their jobs and become unemployed. Most small depositors, in particular, do not have enough money to deposit in banks," he said.
A good number of virus-affected people had to withdraw their fixed deposits to meet their daily expenses. Besides, even after the pandemic situation has somewhat improved, many people cannot go for savings in the wake of a rise in living costs, Dr Salehuddin added.
Moreover, banks have reduced interest rates on deposits so much that even those who have money in their hands are no longer interested in parking money in the banks. Most savers are moving towards savings certificates. However, it is not possible to invest more than the prescribed amount in the savings tools.
The people are also indirectly being discouraged to buy savings instruments by imposing strict regulations on the purchase, the former central bank governor opined.
Echoing him, former managing director of Agrani Bank Abu Naser Bakhtiar told TBS that the government has fixed the interest rate ceiling on lending, but not deposits, resulting in savers losing interest in banks.
The interests on deposits now range between 2% and 5%.
Besides, a lack of good governance in banks and the non-bank financial institutions (NBFIs) has created distrust among clients. Many people do not feel safe parking money in the banks, he also said.
Stressing the need for restoring good governance in the financial sector, Abu Naser said deliberate defaulters should be punished.
Salehuddin Ahmed warned that necessary capital for investment will not be available if people continue to lose interest in depositing money in banks.
If the domestic investment does not increase, it will also have a negative impact on foreign investment. Therefore, the former governor thinks that the decline in bank deposits is giving a negative signal.