Zarif Mahmud: The negative impact of prolonged economic recession has started to fall on the banking sector. Overall, the growth rate of deposit flow in banks is decreasing. This rate is decreasing in cities as well as in villages. However, the growth rate of deposits has decreased more in villages than in cities. Sometimes it becomes negative.
This information was obtained from a report of the central bank published recently. This report is published every three months showing the overall picture of banking deposits and loans. This time the report has been prepared on the basis of data till December last year.
According to sources, recession started from 2020 due to Corona. The Russia-Ukraine war started in February last year before the Corona crisis was overcome. This resulted in a global recession, which is still ongoing.
In these recessions, especially in rural areas, employment has contracted. People’s income has decreased. At the same time, the price of daily commodities has increased. Due to which people are now not able to save after spending their income with income. In addition, according to the data of the Bureau of Statistics, the rate of inflation has increased more in rural areas than in urban areas. That is, the price of goods and services is higher in the village than in the city. Due to these reasons, overall, the growth rate of deposits in villages has also decreased more than in cities. In some quarters, the rate has gone negative in villages.
In some quarters, the rate has gone negative in villages. That is, deposits have not increased, on the contrary, they have decreased more than before.
According to the report of the central bank, the overall deposits in the banking sector increased by 3.39 percent in October-December 2021. It has increased by 0.74 percent during the same period last year. The deposit growth rate has decreased by 2.65 percent during the period under discussion.
Deposits in the city increased by 3.57 percent in October-December 2021. It has increased by 1.29 percent during the same period last year. During the period under discussion, the deposit growth rate has decreased by 2.28 percent.
In October-December 2021, rural deposits increased by 2.74 percent. During the same period last year, deposits in village bank branches did not increase. On the contrary, it has decreased by 1.26 percent from the previous deposit. In the January-March quarter of last year too, the flow of deposits in villages went negative. Although it increased in the last April-June and July-September quarter, it turned negative in the October-December quarter. That is less than before.
According to sources, the contribution of cities is more in the total deposits, villages are less. Village contribution to total deposits has declined. Villages accounted for 21.51 percent of total deposits in December 2021. Last December it decreased to 21.25 percent.
At the same time, the contribution of the city increased. The city’s contribution to total deposits increased from 78.49 percent to 78.75 percent.
Until December last year, deposits in government banks increased by about 1 percent, while in specialized banks, they decreased by 80.0 percent. Foreign banks increased by 8.57 percent and Islamic banks decreased by 2.90 percent. Before this, deposits in Islamic banks always increased.
However, the demand for loans has increased more in rural areas than in urban areas. Its demand is high in rural areas especially due to increased loan flow at low interest under the incentive package. As a result, the distribution has also increased. But overall debt is higher in cities. Over 88 percent of total credit is in urban areas and less than 12 percent in rural areas.
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