• Saturday, Sep 26, 2020
  • Last Update : 11:30 am

Banks’ deposit growth rises in July

  • Published at 09:34 pm September 15th, 2020
Representational image Bigstock

Bankers have attributed the rise in deposits to normalcy in economic activities despite the high Covid-19 infection rates

Deposits in the country’s banking sector rose by 11.43% in July this year from June after growth had faltered in the preceding two months.

Bankers have attributed the rise in deposits to normalcy in economic activities despite the high Covid-19 infection rates.

Growth stood at 11.43% in July, which was 10.94% in the previous month, according to Bangladesh Bank (BB) data.

The deposit growth rate was 11.88% in April this year, but the rate consistently declined in May and June, by 11.28% and 10.94%, respectively, when the country was under a lockdown.

Deposit growth increased in July over June as savers had returned to banks after the countrywide shutdown was withdrawn, said Standard Bank managing director and CEO Khondoker Rashed Maqsood.

He said till now savers had no ways other than  parking their deposits in banks.

“Although the present situation in the country’s stock market has changed positively, it will take some more time to restore the confidence of investors. As a result, banks are the ultimate destination for savers   despite banks' interest rates being low now,” he added.

Many clients of banks could not deposit their installments against monthly savings schemes from March to May as a huge number of people had lost their jobs and were confined in their homes.  The situation had changed now despite the high Covid-19 infection rates, said Association of Bankers, Bangladesh (ABB) Secretary Rahel Ahmed.

Banks had faced deposit withdrawal pressures from March to June as panic-driven clients could not deposit money in banks and spent money from their savings, he added.

Rahel Ahmed, who is also managing director of Prime Bank ltd, noted that the deposit withdrawal trend had been minimized now as people were going back to business.

Bankers and economists said the high growth of remittance had also contributed to the rise in deposit growth. People had earned more money in the form of remittances which they had not spent fully, they added.

Remittance inflow increased by 50% to $4.56 billion in the July-August period of the current fiscal year, compared to the same period of the last fiscal year, according to data available from the BB.

Strict rules imposed by the government to regulate investment in national savings certificates had encouraged most savers to park their deposits in  banks despite low interest rates, said a high official of a private commercial bank.

The government in the last previous fiscal year imposed a 5% tax at source on interest income from NSCs worth up to Tk5 lakh. It also levied a 10% tax at source for investment in schemes above Tk5 lakh.

According to new rules imposed by the government, those who are investing in the purchase of savings tools should submit their electronic taxpayers’ identification numbers (e-TIN) and national identity cards (NID). If the amount is more than Tk1 lakh, they must pay the money through bank cheques.

The tighter rules and regulations are also in force in the current fiscal year.

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