Dhaka, Bangladesh (BBN)– The deposit growth in the banking sector of Bangladesh increased slightly in the first-half (H1) of the current calendar year following a higher remittance inflow.
Lower sales of national savings certificates (NSCs) in the recent months also helped push up the volume of bank deposits during the period under review, bankers said.
They expect that such an upward trend of deposits in the banking sector may continue into the coming months also.
The growth of deposits, on a year-on-year basis, rose to 11.48 per cent as of June 30 last from 11.07 per cent six months ago, according to the central bank statistics. It was 10.96 per cent as of March 28, 2019.
All banks’ deposits, excluding inter-bank balance, rose to BDT 9.77 trillion as of June 30 last, from BDT 9.25 trillion as of December 31, 2018. The figure was BDT 9.36 trillion as of March 28 last.
Talking to the BBN Syed Mahbubur Rahman, chairman of the Association of Bankers, Bangladesh (ABB), said investment in the NSCs decreased slightly in the recent months following higher interest rate on deposits, offered by the banks, particularly private commercial banks.
Higher remittance inflow along with disbursement of funds by the government against different development projects in June contributed to the increase in deposits of the banks, the senior banker explained.
“The deposit growth in the banking sector increased further in the month of July and it would continue in the coming months,” a senior official of the Bangladesh Bank (BB) said while explaining the latest situation on deposits.
The overall deposit growth stood at around 12. 50 per cent in July 2019, he added.
The government earlier imposed some restrictions on purchase of NSCs.
The government has already developed a database of NSC investors to see if there is anyone crossing the NSC investment limit or making fictitious investments.
The net sales of NSCs came down to BDT 32.08 billion in June from BDT 32.58 billion in the previous month, according to official figures.
Besides, the inflow of remittances grew by 9.65 per cent to a record high of US$16.42 billion in the fiscal year (FY) 2018-19 from $14.98 billion a year ago.
On the other hand, all the banks’ credit growth came down to 12.38 per cent as of June 30 last from 14.07 per cent as of December 31, 2018. The figure was 13.15 per cent as of March 28 in the current calendar year
The banks’ total outstanding loans, excluding inter-bank balance, rose to BDT 11.81 trillion as of June 30 last from BDT 11.65 trillion as of December 31, 2018. It was BDT 11.20 trillion as of March 28 last.
The lower credit growth helped keep the overall advance-deposit ratio (ADR) unchanged at 77.51 per cent as of June 30 compared to the level of December 31 last. The ratio was 78.26 per cent as of March 31, 2019.
The ADR has been re-fixed at 83.50 per cent for all the conventional banks and at 89 per cent for the Shariah-based Islamic banks. The existing ratios are 85 per cent and 90 per cent respectively.
The banks will have to comply with the revised limit of ADR by September 30, according to the BB’s directive.