Both bank deposits and loans or debt in the country's banking sector has tripled in the last decade.
Data analysis revealed that deposits have increased by Tk1 lakh crore every year and more than one-third of the total deposits in the banking sector are being deposited as FDR (Fixed Deposit Receipt).
All these data have been found by analyzing the Bangladesh Economic Review 2022.
The report was presented in the National Assembly on June 9 by the Finance Department of the Ministry of Finance. It contains deposit information up to December 2021 and loan or debt information up to February 2022.
According to the review report, as of December 31, 2021, the deposits in the banking sector were Tk15,12,473 crore.
On the other hand, the amount of debt was Tk15,46,241 crore as of February 2022.
By analyzing the data Dhaka Tribune found that, from FY13, the amount of deposits was Tk5,72,108 crore. In nine and a half years till December 2021, the deposits have increased by Tk9,40,365 crore.
Deposits are increasing by an average of Tk1 lakh crore (Tk98.98 thousand crore) per year. Debt has also increased at the same rate.
According to the data in FY13, the bank sector's total loan disbursement was Tk5,71,737 crore. It also mentioned the government and private sector loans or debt.
As mentioned, till February of the current financial year, the government debt status was Tk2,67,385 crore.
Simultaneously the private sector loan was Tk12,78,856 crore.
Highest deposit from FDR
A fixed deposit receipt (FDR) is a financial instrument provided by banks in Bangladesh which provides investors with a higher rate of interest than a regular savings account, until the given maturity date.
The report mentions that there are 14 types of classes in the banking sector for saving deposits but most of these deposits came from FDR.
FDR has five classes– these are deposits for three to six months, six months to one year, one to two years, two to three years and more than three years.
Among those, the total deposit from the FDR account was Tk6,74,807 crore till December 2021.
Among this, Tk2,33,167 are for three to six months FDR another Tk2,20,729 crore deposited to one to two years types of FDR.
Concerns rising about government banks borrowing and NPL targetAccording to Bangladesh Bank data, as of April last year, the government had borrowed Tk1,71,420 crore from the banking sector.
At the end of April of the current fiscal year, the debt has come to stand at Tk2,34,604 crore.
Ahsan H Mansur, executive director at Policy Research Institute (PRI) said: “Deposit growth is not bad. but it does not look like it is going to be good in the next fiscal year. People's savings are declining owing to rising inflation, which may continue next year. In this situation, if the government borrows so much in the new fiscal year, the private sector's credit flow may be disrupted.”
Md Jashim Uddin, president of the Federation of Bangladesh Chambers of Commerce and Industry, also fears that private investment growth and credit flow to the sector will slow down if govt borrowing goes up in the next fiscal year.
Earlier, he told Dhaka Tribune: “If the government's bank borrowing surges to such a great extent at this time, SME entrepreneurs will suffer the most. The international market is very volatile. there might not be any new investments because of this too.”
On the other hand, non-performing loans (NPL) have reached Tk1,13,441 crore by the first quarter of 2022, which is just short of Tk2,847 crore to reach the amount of the country’s highest-ever defaulted loans. In September 2019 default loans amounted to Tk116,288 crore and Tk95,085 crore in March 2021.
Speaking on the loan trend, the former lead economist of the World Bank Dhaka office Zahid Hussain told Dhaka Tribune: “Large corporations take loans from these banks (Government and specialized banks). And because the pressure to return the money is less, they do not show interest to repay the loans. Entrepreneurs and businessmen are turning the defaulter trend into a business model. Sometimes they go to the courts without repaying the loan in order to buy more time.”
