Banks have registered sluggish growth in deposits throughout the current fiscal year as elevated inflation and an economic slowdown have squeezed the scope for many to save, even though the interest rate has risen.

Islamic wings of conventional banks have become the preferred choice for religiously inclined depositors as many full-fledged Shariah-based banks struggle with a crisis of trust.

Deposit growth of shariah-based banks in Bangladesh plunged in 2022 mainly due to lower confidence among savers after a number of scams in the sector were unearthed by the central bank.

The deposit growth in the banking sector of Bangladesh rose in the first quarter of 2023 from a quarter ago as businesses prefer to park funds with lenders instead of making investments amid the ongoing economic slowdown and uncertainty.  

Private sector credit growth in Bangladesh dropped to a 14-month low of 11.23 per cent in April owing to weak credit demand amid the current business slowdown, official figures showed.  

Foreign banks operating in Bangladesh registered an 8.57 per cent growth in deposits in the October-December quarter of 2022, the highest since 2018, as many savers shifted their funds from local banks amid a confidence crisis. 

Non-bank financial institutions (NBFIs) have been witnessing a persistent fall in deposits for the past one year as many clients withdrew their savings to manage expenses amid the soaring cost of living and lower returns.