Currency outside banks still rising

The currency outside the banking channel, which means cash in hand, continues to rise in the recent months as people are holding more money in their hands than before due to inflationary pressure.

About Tk2,57,667 crore was outside the banking channels at the end of February of this year, up from Tk2,12,270 crore in the same month of last year, as per the latest data from the Bangladesh Bank.

The amount of currency outside banks was at Tk2,36,448 crore at the end of June last year.

Now people are holding more money to their hands than before to buy their essential goods as its price has skyrocketed due to inflationary pressure, said industry insiders.

The country’s inflation rate reached 9.33 per cent in March of this year.

The inflation rate up 55 basis points from the 8.78 per cent reported in February, Planning Minister MA Mannan recently said to the journalist.

A senior official of the Bangladesh Bank said that people are withdrawing their deposits from banks because the real interest rate on deposits went negative due to inflationary pressure. At the end of February of this year, demand deposit, a deposited fund that can be withdrawn at any time without advance notice, stood at Tk1,79,630 crore.

During July to February of this year, demand deposits fell by Tk9825 crore, which was at Tk6807 crore at the same period of last year. Mutual Trust Bank Managing Director and CEO Syed Mahbubur Rahman said that this is a very concerning situation.

People are now searching for a more suitable place for investment instead of banks, he added.

Nurul Amin, former president of the Association of Bankers, Bangladesh, told The Business Post, “Middle and higher-middle-class people now have no alternatives but to encash their term deposits to cover living expenses.

“Meanwhile, low-income people are now covering their daily expenses by borrowing from banks and other sources. The country’s economic situation is currently not very good.”

Recently, some Islamic banks faced huge cash withdrawal pressure when their loan irregularities came to light.