Despite banks offering interest rates three times higher than two years ago, many people are keeping their money outside the banking system. By the end of March, the cash held outside banks totaled Tk261,195 crore, up from Tk257,574 crore the previous month, even with banks offering nearly 10% interest on deposits.

Typically, withdrawn money circulates and eventually returns to the banking system. However, in March, at least Tk3,000 crore remained outside. Experts attribute this to high inflation, leading people to dip into their savings, and fear of a banking crisis.

A private bank's managing director, speaking anonymously, noted that people usually return withdrawn money to banks, but recent news of bank mergers caused many to withdraw their deposits, especially during Ramadan when cash demand rises.

This situation has led to a slight liquidity crisis for banks, which are purchasing dollars from the central bank to meet import liabilities. To counteract this, the central bank has provided liquidity assistance. Banks are now competing aggressively for deposits, offering interest rates of 10% to 11% and promising to double deposits within five years.

Central bank records show a significant increase in interest rates on deposits and loans over the past two years. This has adversely affected customers with loans for homes or cars and industrial entrepreneurs. In January, deposits decreased by Tk13,000 crore compared to December, reflecting a withdrawal of matured savings accounts.

Dr. Zaid Bakht of the Bangladesh Institute of Development Studies (BIDS) noted that despite more money being outside banks, deposit growth rate has increased, indicating a transfer of deposits among banks rather than a loss of overall banking trust.