TDS Desk:

Commercial banks in Bangladesh are scaling back efforts to grow deposits as slowing economic activity reduces investment opportunities, prompting a shift towards maximising the use of Bangladesh Bank’s short-term liquidity instruments.

Top executives from several banks told in recent weeks that the sluggish economy has left them reluctant to take on additional liabilities, particularly costly deposits, given the limited avenues for deploying funds profitably.

Instead, they are leaning more heavily on central bank facilities to meet day-to-day liquidity needs.

Bangladesh Bank Executive Director (Grade-1) Dr Md Ezazul Islam said the central bank’s tight monetary policy, including a 10.0 per cent policy rate aimed at curbing inflation, has pushed up both lending and deposit rates.

Yet, despite the higher returns, deposit growth has been slowing, which is a cause for concern, he added.

He noted that banks appear less aggressive in deposit mobilisation, likely due to lower private sector credit demand. BB data show deposit growth dropped to 7.77 per cent in June 2025 from 9.25 per cent a year earlier.

A treasury head at a private commercial bank, speaking on condition of anonymity, said the slowdown in economic activity had significantly curtailed investment opportunities.

“Instead of securing costly deposits, banks are increasingly relying on the central bank’s repo and special liquidity facilities,” he said.

According to BB data, banks borrowed Tk 1.80 trillion in April, with monthly borrowing surging to over Tk 2.25 trillion by June.

Mutual Trust Bank PLC Managing Director and CEO Syed Mahbubur Rahman said MTB is focusing less on deposit mobilisation in the short term due to the squeeze in investment prospects.

“We welcome low-cost deposits and transaction accounts. But if we cannot invest the funds, how can we deliver returns?” he asked.

He added that private sector credit demand is falling, while yields on treasury bills, once an attractive investment, have dropped sharply in recent weeks, suggesting lending rates may need to come down to remain competitive.

“Taking on costly deposits now would create a liability burden that will be difficult to absorb in the current market,” he warned.

BB data show private sector credit growth fell to 6.49 per cent in June 2025, down from 9.84 per cent a year earlier.

NRBC Bank Managing Director and CEO Dr Md Touhidul Alam Khan said his bank is instructing staff nationwide to focus on CASA, current and savings accounts that generate low or no interest costs.

“We’re prioritising low-cost deposits in the short term because of the limited investment outlook. Under the circumstances, we must be very calculated,” he said.

Despite the cautious approach, Dr Khan noted that NRBC Bank recently reached a Tk 200 billion deposit milestone, the highest among the country’s fourth-generation banks.