The amount of paper money kept out of Bangladesh's banking network continued its upward climb in June, pointing to an increasing preference for physical cash during a period when commercial activity remains sluggish and trust in financial institutions has not completely returned.
Physical cash sitting outside financial institutions, commonly referred to as money under the mattress, climbed to Tk336,000 crore by the end of June 2026, marking a 13.5% jump from the Tk296,000 crore seen a year prior, figures from Bangladesh Bank reveal.
This growth indicates that an extra Tk40,000 crore was kept out of official bank accounts over the twelve-month period, which could place extra stress on bank liquidity at a time when request for cash payouts stays high.
The fresh numbers also show a steep rise compared to the Tk303,000 crore documented in March, with cash kept away from banks jumping by roughly 10.9% over a mere three months.
The accumulation gathered momentum throughout the opening quarter of 2026. Money stored outside banks grew from Tk283,000 crore in January to Tk286,000 crore in February, before spiking to Tk303,000 crore in March.
Those familiar with the situation stated that financial institutions were still dealing with strain on their cash vaults because customers favored keeping physical notes over storing their funds in savings accounts.
They explained that doubts surrounding the banking system, such as the sudden leadership swap at the central bank authority and modifications to an important financial law, were not received well by account holders and broader industry players.
This growth in cash reserves occurred even as the wider supply of money expanded at a relatively slower speed.
Broad money (M2) grew by 11.11% on an annual basis to Tk2,416,000 crore in June 2026, up from Tk2,174,000 crore the previous year.
This demonstrates that cash stored outside banks expanded roughly 2.4 percentage points faster than total broad money across that timeframe, showing that the growth in physical paper money outpaced the overall growth of the money system.
The M2 expansion in June also ran higher than the central bank's projected 10.80% and stood well above the 6.95% rate logged in June 2025.
At the same time, reserve money (RM), which measures the foundational money base including circulating notes and bank reserves, surged by Tk63,189 crore, posting a 15.29% annual increase at the close of June 2026.
The quicker expansion of reserve money compared to broad money indicates that base liquidity within the monetary setup grew substantially, even though a major chunk of the heightened demand for cash was retained away from commercial institutions.
Paper money kept outside banks totaled Tk296,000 crore in June 2025, compared to Tk290,000 crore in June 2024, proving that the speed of cash stockpiling has picked up noticeably over the last year.
This recent rise marks a major change from the fairly gentle climb seen between June 2024 and June 2025.
Banking figures noted that rebuilding faith in the financial sector will be essential for drawing more paper currency back into official banking accounts.
They warned that ongoing unease could prompt families and companies to hold on to bigger cash reserves, which might hurt deposit gathering and limit the power of banks to direct money into helpful economic loans.