People now feel more comfortable keeping money back at home than in banks for various reasons including loss of confidence and irregularities in these financial entities.
As a result, the clients of banks have withdrawn an unprecedented amount of Tk 18,000 crore during June-July, an official of Bangladesh Bank said.
According to Bangladesh Bank data, the rate of withdrawal from banks has increased by 33.68 percent in one year. Till July 2019, the amount of money outside the bank was Tk 1,57,000 crore. Until July 2020, the amount of money outside the bank stood at Tk 2,10,000 crore. But even in June, the money outside the bank was Tk 1,92,000 crore. As a result, customers have withdrawn Tk 18,000 crore from the banks in a span of one month, causing decline in demand deposit of the banking sector. Demand deposits have declined by 5 percent or Tk 12,000 crore in one month.
However, term deposits in the banking sector have increased slightly in the space of one month, which was Tk 11,81,000 crore in June-2020. At the end of July 2020, it stood at Tk11,93,000 crore.
Experts say that people's loss of confidence in the banking sector is due to the ongoing irregularities and corruption on the one hand while on the other, people are withdrawing money from banks and keeping it in their hands thinking that they may need cash at any time due to the coronavirus-related economic fallout.
Again, this Covid-19 pandemic has suddenly slashed people's income along with an increase in the cost of living. In addition to withdrawing deposits to meet their own needs and requirements, savings of many people have dwindled drastically due to the spread of deadly coronavirus.
As a result, bank deposits are coming down. In just one year, the deposit rate in the banking sector has dropped by 30 percent. In just one month, in the June-July period of this year, deposits in the banking sector have declined by more than 19 per cent.
Executive Director of Bangladesh Bank Sirajul Islam said, Eid-ul-Adha was celebrated last August. In addition, the cost of living has increased slightly due to Covid-19. As a result, people took a little more money from the bank at that time. But term deposits have increased. As a result, it cannot be said that people's confidence in the banking sector is declining, he said.
According to sources, the World Health Organization itself cannot say how long the Covid-19 pandemic, which started late last year, will actually last.
Meanwhile, a large number of people have lost their jobs and are on the unemployed list.
Again, the recession is not cutting the situation. Because people are not shopping unless absolutely necessary. Not only this, in some cases there are many jobs but they are not getting regular salary. As a result, the lower and middle classes are struggling to make ends meet. In such a situation, people are withdrawing money from the banks without depositing it. As a result, customers have withdrawn Tk 18,000 crore from the bank in a span of one month. Similarly, from July last year to July this year, more than Tk 53,000 crore has been withdrawn from the banks. And in the space of six months, the amount is Tk 35,000- Tk 40,000 crore.
Besides, the amount of deposits and savings in the banking sector is also declining rapidly. In the June-July period alone, deposits in the banking sector declined by more than 5 per cent. However, long-term deposits have increased by 1.6 percent during this period.
Former caretaker government's adviser to the chairman of the private company BRAC Hossain Zillur Rahman told The Business Post that a large number of people lost their jobs and became unemployed due to the coronavirus. The World Labour Organization (ILO) also says one in four people is now unemployed, he pointed out. As a result, people are living off their savings in banks.
Again, some people are taking money from the bank and keeping it for themselves to meet their immediate needs. As a result, the amount of deposits in the bank is decreasing. Although it was not understood before how long this situation has lasted, now everyone understands that the Covid-19 crisis is not ending suddenly, he said.
Former IMF economist Reza Kibria told The Business Post that the Covid-19 crisis is a multi-dimensional crisis. People have never faced such a crisis before.
In addition, all classes of people are more or less affected. It also has an effect on people's income. But the cost of living has increased in some cases, so people are meeting their expenses from their bank deposit, he said.
As a result, people are not able to keep new deposits. On the other hand, many people are withdrawing from their bank accounts, he said. He also said, “People's confidence in the bank reduces due to financial scam. My advice to the people is to deposit their money in a financially sound banks rather than in leasing companies.”
ask/wi
