Bank deposits have decreased by nearly 13,000 crore taka in just one month, from late December to January this year, due to concerns over bank mergers.
This information comes from Bangladesh Bank’s published report titled ‘Islamic Banking and Finance Statistics.’ The report indicates that bank deposits stood at 17,70,363 crore taka at the end of December. By January, this amount had fallen to 17,57,423 crore taka, a reduction of approximately 13,000 crore taka.
According to the report, as of the end of January, Shariah-based banks held deposits totaling 4,13,969 crore taka, down from 4,22,464 crore taka at the end of December. This indicates a decrease of 8,495 crore taka in Shariah-based banks. Conventional banks saw a reduction of 4,443 crore taka in the same period.
Bankers have found it difficult to pinpoint an exact reason for the decline, as deposit balances typically increase with accrued interest. However, many believe the decline is linked to the Bangladesh Bank’s decision to merge several weaker banks, announced in December. This announcement led many depositors to withdraw their funds out of fear and uncertainty.
The situation worsened when the formal merger process began in March, causing even more panic among depositors.
Economist Dr. Mahfuz Kabir commented that the fear of bank mergers has led many depositors to withdraw their money, unsure of which banks would merge and whether their funds would be secure post-merger. Additionally, rising inflation has increased the need for extra cash, prompting many customers to break their fixed deposits and withdraw other savings from banks, further contributing to the decline in deposits.
In light of these events, Basic Bank sent a letter to the Ministry of Finance on April 8, highlighting an unusual spike in withdrawals following news of its merger with a private bank. The state-owned bank is now in deep crisis due to the abnormal withdrawal of deposits.
In efforts to restore discipline and ensure good governance in the banking sector, Bangladesh Bank announced a 17-point roadmap on February 4. Subsequent merger decisions included merging Padma Bank with EXIM Bank on March 14, merging Rajshahi Krishi Unnayan Bank with Bangladesh Krishi Bank, and merging Bangladesh Development Bank with Sonali Bank on April 3.
On April 8, it was decided that City Bank would merge with Basic Bank, and finally, National Bank would merge with United Commercial Bank (UCB).
