Following political transition and central bank reforms, public trust in the banking sector has begun to rebound, with nearly Tk 21,000 crore returning to the formal banking system over the past six months, according to Bangladesh Bank data.
During the final months of the previous Awami League government, widespread reports of irregularities and alleged looting in the banking sector triggered a wave of withdrawals, pushing cash outside the banking system to a record high of Tk 2.94 trillion in August 2023. Fearing instability, many individuals opted to keep their money in hand rather than in banks.
However, in the wake of the interim government’s stability-focused initiatives and transparency measures, public confidence in financial institutions has started to recover. Bangladesh Bank’s latest report reveals that from September 2023 to February 2024, out-of-bank cash decreased to Tk 2.71 trillion—indicating that approximately Tk 20,939 crore has flowed back into banks.
Sector insiders note that several financial scandals were concealed during the previous administration, but after the political shift, these began surfacing, intensifying public concern. “Initially, the public responded by pulling out their savings,” a senior official said. “But as we introduced liquidity support and attractive deposit rates, depositors began returning.”
In late 2023, some banks faced severe liquidity shortages, prompting panic among customers. In response, banks have since introduced competitive interest rates to attract new depositors. The central bank believes this move has significantly contributed to reversing the outflow trend.
From October 2023 to August 2023, out-of-bank cash steadily climbed each month, peaking in August. But since September, a consistent downward trend has been observed, reflecting renewed faith in the banking system.
Bangladesh Bank’s spokesperson confirmed that the situation has stabilized and noted, “People are now showing interest in formal banking again. Deposit trends are rising, and confidence is steadily rebuilding.”
LND/BG
