Deposits in foreign banks increase by Tk6,000 crores in 3 months

Foreign banks operating in Bangladesh saw deposits increase by around Tk6,000 crore in the December quarter at a time when local public and private banks were scrambling for deposits after news on loan irregularities and frauds there emerged.

According to the Quarterly Scheduled Banks Statistics released by the Bangladesh Bank on Tuesday, deposits of nine foreign banks operating in the country stood at Tk73,980 crore at the end of the December 2022 quarter, up from Tk68,143 crore in the September quarter.

Deposit growth was 8.57% in the December quarter.

Besides, compared to the December quarter of 2021, the growth of deposits in December 2022 has been Tk9,118 crore or 14%. In December 2021, deposits at foreign banks stood at Tk6,4861 crore.

Bankers said the country's state-owned and private banks are offering higher deposit rates than foreign banks.

"When the economy is normal, people invest more in risky sectors. When the economy becomes abnormal for various reasons, people tend to invest more in places where security is more profitable, but profits are less," the managing director of a foreign bank told The Business Standard on condition of anonymity.

"Some of the best banks in the country have seen large withdrawals after information spread about the loan irregularities in the market. Customers cannot keep this money for a long time. They invest in different ways. Customers are keeping more deposits here as they have good credit in foreign banks," he added.

Last November, after news about loan frauds in several Islamic banks appeared in the media, the deposits in those banks decreased. At the same time, central bank data shows that the amount of money outside banks has increased from last July to December.

According to the monetary survey report of the central bank, the amount of money outside the banks was Tk2 lakh 36 thousand crores in June 2022. In January 2023, the amount of money in people's hands has increased to Tk2 lakh 62 thousand crores – implying that in seven months, people have withdrawn about Tk26 thousand crores from the banks.

According to the report, it can be seen that the deposit growth of private banks, including Islamic banks, decreased significantly in the December quarter.

At the end of June 2022, deposits of private banks were Tk10 lakh 59 thousand crores. Deposit growth during the period was 4.90% compared to the previous March quarter. However, the deposit growth was very poor as information about the country's inflationary debt irregularities came to the market.

Deposit growth in the September quarter of 2022 was 0.74%. It grew by 0.22% in the December quarter of 2022. At the end of December, the deposits of private banks stood at Tk10 lakh 69 thousand crores.

The Quarterly Scheduled Banks Statistics report added that deposits of Islamic banks at the end of June quarter 2022 were Tk3 lakh 61 thousand crores. During that period the deposit growth was 3.47%. However, the deposit growth was 1.36% in the last September quarter. At the same time, deposit growth was negative at -2.90% in the quarter of December 2022. At the end of December, their deposits stood at Tk3 lakh 55 thousand crores.