Commercial banks in Bangladesh are scaling back efforts to grow deposits as weaker economic activity limits investment opportunities, with many turning to Bangladesh Bank’s short-term liquidity facilities instead.

Bangladesh Bank Executive Director (Grade-1) Dr Md Ezazul Islam said tight monetary policy, including a 10% policy rate to curb inflation, has pushed up both lending and deposit rates. Despite higher returns, deposit growth slowed to 7.77% in June from 9.25% a year earlier.

He suggested banks are less aggressive in deposit mobilisation due to weaker private sector credit demand.

Central bank data show banks borrowed Tk 1.80tn in April, rising to over Tk 2.25tn by June. Private sector credit growth fell to 6.49% in June from 9.84% a year earlier.

Mutual Trust Bank CEO Syed Mahbubur Rahman said the lender is focusing on low-cost transaction accounts rather than term deposits, citing limited investment prospects and falling treasury bill yields. “If we cannot invest the funds, how can we deliver returns?” he said, warning that costly deposits could create burdens in the current market.

NRBC Bank CEO Dr Md Touhidul Alam Khan said his bank is prioritising current and savings accounts with low or no interest costs.

A treasury head at a private bank noted growing reliance on repo and special liquidity facilities to meet short-term funding needs.