The banking sector in Bangladesh has seen a significant turnaround as customer confidence begins to rebound, with cash previously held outside the system now returning to banks.
This shift comes after a tumultuous period marked by high inflation, irregularities in banking operations, and a surge in cash withdrawals following the July Revolution of student-led public movements.
The numbers tell the story
According to the Bangladesh Bank, the amount of currency circulating outside the banking system stood at Tk 3.02 trillion in mid-August. By the end of October, that figure had dropped to Tk 2.79 trillion, signaling a reversal in the trend of cash hoarding. The central bank reported that Tk 210 billion in cash returned to banks during October alone, underscoring growing public trust in financial institutions.
Rebuilding trust amid challenges
A senior official from Bangladesh Bank remarked that the surge in cash withdrawals during the crisis had strained liquidity in several banks, causing disruptions for depositors. In some cases, customers were unable to access their funds at specific branches. However, strategic interventions and assurances from the central bank appear to have calmed anxieties.
“People’s confidence in banks is gradually improving. With over Tk 21,000 crore deposited last month, cash in hand is finally making its way back to banks,” the official said.
Proactive measures by Bangladesh Bank
Despite this positive development, liquidity issues persist in some weaker banks. Bangladesh Bank has provided Tk 55.85 billion in support over the past six weeks to stabilize these institutions. The central bank has urged depositors to refrain from unnecessary withdrawals, assuring them that their money is safe.
The central bank’s executive director and spokesperson, Husne Ara Shikha, highlighted this during a recent press briefing: “No bank in the world can handle sudden mass withdrawals at once. There’s no need to panic—depositors will get their money. We are committed to restoring trust and improving the banking system’s overall health.”
The road ahead
While cash inflows into banks signal a positive trajectory, experts caution that systemic issues like poor governance and weak bank mergers must be addressed to ensure long-term stability. For now, the return of public confidence offers a much-needed reprieve for the banking sector, signaling the first steps toward recovery in a turbulent economic environment.