Cash outside banks stood at Tk 2,66,354.60 crore in July this year, compared to Tk 2,91,913.50 crore posted in June 2023, signifying an increase in the amount of currency inside the banking channel.
An analysis of these figures, published by the Bangladesh Bank on Sunday, show a Tk 25,558 crore or 8.85 per cent decline in the amount of cash outside banks.
It should be noted that the money outside banks and banking sector liquidity are deeply connected. When liquidity increases, currency outside banks decreases. Similarly, cash in the hands of people increases when liquidity goes down.
Excess liquidity position in the banking sector was 1.80 lakh crore in July this year, compared to Tk 1.66 lakh crore in June.
Speaking to The Business Post, spokesperson and Executive Director of Bangladesh Bank Mezbaul Haque said, “After the SMART method started, the banks began offering slightly better interest rates against deposits.
“People always have trust in the banking sector. But the people got scared due to some rumours last year and opted to withdraw their money from the banks. People are interested in depositing money to the banking sector again.”
Dhaka Bank Managing Director and CEO Emranul Haque said, “Imports are gradually decreasing, and it is the key reason behind the banking sector’s rising liquidity. Because when importers cut imports, the amount of money in the banking sector usually goes up.
“People had invested money in other sectors instead of banks due to a lack of trust and less interest on deposits. But people now think banks are the best place to invest money. Besides, the central bank took many initiatives to boost liquidity in the banking sector.”
City Bank Managing Director Mashrur Arefin, “Banks are now offering a slightly higher interest rate to customers. So, when people saw that banks are offering at least 1.50 per cent more interest following the introduction of the SMART rate, they began investing in banks.”
“Banks are unsure about what their liquidity position could be in the coming days. That is why banks are currently trying to get more deposits. Moreover, businesses are not investing due to the upcoming national polls, as people usually hold onto their money during such periods.”
Cash outside banks rose year-on-year by 23.46 per cent to Tk 2.91 crore in FY23, show central bank data published recently.
That time, bankers and experts point out that the tendency among people to hold onto cash has increased in recent years due to a lack of trust in the banking sector – following a series of scams.
