The country's banking sector is suffering from instability as news of various irregularities, mismanagement, corruption and looting comes out. However, despite this, the amount of deposits has increased. In the second quarter of this year (April-June), deposits in the banking sector increased by 73,790 crore taka or 3.8 percent. This information is known from the latest updated statistics of Bangladesh Bank.

According to statistics, at the end of March this year, the amount of deposits in the banking sector was 19 lakh 23 thousand 504 crore taka. And at the end of June, it stood at 19 lakh 96 thousand 583 crore taka. That is, in just three months, deposits in the banking sector have increased significantly.

According to Bangladesh Bank data, the growth in deposits in rural areas was higher than that in urban areas during the April-June quarter. The growth in deposits in rural areas was 4.87 percent, while the growth in urban areas was 3.6 percent during the same period.

At the end of June this year, out of the total deposits of Tk 19,96,583 crore in the banking sector, urban deposits were Tk 16,80,558 crore. While the amount of deposits in rural areas stood at Tk 3,16,24 crore. At the end of March, 84.17 percent of the deposits in the banking sector were in urban areas and 15.84 percent in rural areas.

According to analysts, the growth in deposits in rural areas has been somewhat higher due to the increased use of banking services and digital platforms. In addition, various savings certificates and incentive schemes are also playing a role in increasing rural deposits.

Industry insiders believe that interest rates have also played a major role in the increase in deposits. At the end of March this year, the average interest rate on deposits in the banking sector was 6.24 percent. At the end of June, it increased to 6.31 percent. This slight increase in interest rates has increased the interest of depositors towards banks.

Bankers say that although confidence in the banking sector has started to return somewhat, the rise in interest rates has mainly encouraged people to increase their deposits. Many are interested in depositing money in banks, especially since there is a possibility of earning additional profits by depositing money in banks instead of keeping it in cash.

In the three-month period, along with deposits, credit flow has also increased. At the end of the January-March quarter of this year, the total credit in the banking sector was Tk 1,712,618 crore. At the end of June, it increased to Tk 1,734,172 crore. During this period, credit increased by Tk 21,554 crore or 1.26 percent.

According to the data, out of the loans disbursed by the end of June, 16 lakh 3 thousand 392 crore taka or 92.46 percent went to urban areas. On the other hand, only 1 lakh 30 thousand 780 crore taka or 7.54 percent was disbursed to rural areas.

According to analysts, credit flows are mainly concentrated in urban areas, as business, trade and industrial activities are more prevalent there. Although there are some agricultural and microfinance programs in rural areas, they are very limited compared to total credit.

Bankers say that despite the overall crisis in the banking sector, increase in default loans and irregularities, deposit growth is maintained only because of a few good banks. They say that ordinary depositors are more inclined towards relatively reputable and financially stable banks. As a result, weak banks are still not seeing much success in increasing deposits.

At the same time, they are warning that increasing deposits alone will not solve the banking sector crisis. Even if interest rates increase slightly, if loan repayment cannot be ensured and defaulted loans cannot be reduced, deposit growth will not be sustainable.

Although the increase in deposits in the banking sector in the second quarter of the year is a positive development, the main reason behind it was the increase in interest rates and effective measures taken by some banks. However, since deposits and credit flows are mainly concentrated in urban areas, the participation of rural areas remains limited. To restore confidence in the banking sector, it is necessary to not only increase deposits, but also restore credit, control corruption and irregularities, and establish good governance. Only then will the banking sector be truly stable and can have a positive impact on the overall economy of the country.