Along with keeping urban activity operational, banks in the country are now turning toward rural areas as well.
However, instead of opening full-fledged branches at higher costs, banks are rapidly expanding financial services by relying on low-cost, small-scale sub-branches.
This alternative strategy for collecting local deposits is yielding positive results.
On one hand, it has made it easier to bring banking services to remote areas; on the other hand, driven by the remarkable activity of these sub-branches, the number of clients, bank accounts, and local deposit volume are surging overnight.
However, there is a stark contradiction to this positive trend.
Although local deposit collection has grown rapidly, investments are primarily centralized in main offices and major branches.
As a result, only a nominal fraction of the collected local deposits is being disbursed locally as loans.
This picture emerged from the latest updated report of Bangladesh Bank.
According to data from Bangladesh Bank for the June quarter of this year, deposits collected from these sub-branches increased by Tk4,546 crore in three months compared to March.
Deposits rose from Tk79,717 crore in March to Tk84,263 crore in June—representing a deposit growth rate of 5.7%.
In contrast, deposits across the overall banking sector grew by just 2.4% during the same period.
This indicates that the rate of deposit growth in sub-branches is nearly 2.5 times faster than the banking sector's average.
Beyond the monetary volume, the customer base is also expanding rapidly.
Deposit accounts in sub-branches stood at 8.47 million in March, rising to 8.97 million in June.
Nearly 500,000 new accounts were added in three months.
Consequently, the share of sub-branches in total bank deposits increased from 3.7% to 3.8%.
Rurals lead the way
A major portion of this expansion came from rural areas.
The rural share of total sub-branch deposits rose from 32.8% in March to 33.9% in June.
The share of female deposit accounts also ticked up from 38.2% to 38.4%, highlighting the growing role of sub-branches in collecting small savings directly from communities.
However, that success has not translated into lending. Loans and advances extended by sub-branches stood at Tk22,309 crore in March, which fell to Tk20,602 crore in June—a decline of Tk1,707 crore or 7.7%.
During the same period, loans and advances across the entire banking sector grew by 1.4%.
Sub-branch loans now account for a mere 1.1% of total bank credit.
Bangladesh Bank executive director and spokesperson Arief Hossain Khan said that due to relatively lower operational costs, banks are now focusing more on expanding sub-branches rather than setting up full branches.
This enables them to bring the rural population under the umbrella of banking services while keeping bank expenditure relatively low.
The growing count of sub-branches further demonstrates how attractive this low-cost model has become to banks.
The total number of sub-branches increased from 4,992 in March to 5,033 in June—a net addition of 41 sub-branches in three months.
This network expansion involved opening 30 new rural sub-branches and 19 urban ones, while 8 sub-branches were either closed or merged.
Metric | March | June | 3-Month Change |
Total Deposits | Tk79,717cr | Tk84,263cr | + Tk4,546cr (+5.7%) |
Total Customers / Accounts | 8.47m | 8.97m | +500,000 |
Source: Bangladesh Bank | |||