Bankers have expressed fear that the rationalisation of excise duty on bank deposits from over Tk 10 lakh to Tk 5 crore in the proposed national budget for FY2024-25 may discourage depositors from saving money in banks, at a time when banks are suffering from a liquidity crunch.
According to the budget documents, there will be no change in the excise duty on deposits up to Tk 10 lakh. Currently, the existing slab, ranging from Tk 10 lakh to Tk 1 crore, has an excise duty of Tk 3,000.
Finance Minister Abul Hassan Mahmood Ali proposed that for amounts from Tk 10 lakh to Tk 50 lakh, an excise duty of Tk 3,000 will be imposed. Then for amounts from Tk 50 lakh to Tk 1 crore, an excise duty of Tk 5,000 will be imposed.
In the existing slabs deposits ranging from Tk 1 crore to Tk 5 crore, attract an excise duty of Tk 15,000.
The finance minister proposed that for amounts from Tk 1 crore to Tk 2 crore, an excise duty of Tk 10,000 will be imposed. Then for amounts from Tk 2 crore to Tk 5 crore, an excise duty of Tk 20,000 will be imposed.
Talking to The Business Post, Policy Research Institute of Bangladesh Executive Director Ahsan H Mansur said, “This decision is very bad for the economy as depositors are concerned about the deduct tax of their deposits. The growth of deposits would decline from the banking channel and as a result, it will impact the economy and the whole financial sector as well.
“The banking channel is facing a liquidity crisis, so right now this sector needs deposits. Bankers are offering lucrative deposit rates to their depositors after the withdrawal of the 9 per cent interest cap.”
Requesting anonymity, the managing director of a private bank said that the whole banking sector is suffering from the liquidity crisis. “Right now, we need more deposits and we are offering high interest rates to depositors, but I want to say that the deposit growth would decline due to the tax.
“Tk 3,000 is not a small amount of money for middle-class people. Even upper-middle-class people think about how they would save Tk 3,000, and invest it in other sectors as well.”
According to Bangladesh Bank, at the end of 2023, the number of bank accounts that are holding up to Tk 10 lakh was 1,51,580,831, which was 98.71 per cent of total bank accounts. The deposit amount in those accounts was Tk 5,09,590 crore, which was 18.24 per cent of the total bank deposit.
Meanwhile, 18,63,198 bank accounts are holding over Tk 10 lakh to Tk 1 crore and the deposit amount is Tk 4,98,075 crore.
Besides, there were 92,516 bank accounts with more than Tk 1 crore to up to Tk 5 crore, and they had a total of Tk 1,94,336 crore in deposited money at the end of December 2023.
At the end of 2023, the number of total bank accounts was 15,65,60,937 and the total deposit amount was Tk 17,49,132 crore.
