Crore-taka bank accounts drop by 1,018 in three months

The number of bank accounts holding at least Tk1 crore has dropped by 1,018 in the first quarter because, according to bankers, high inflation and the dollar crisis pushed up production costs, leading to reduced deposits by businesses.

According to data from the Bangladesh Bank, at the end of March this year, bank deposits in such accounts fell by Tk1,316 crore to Tk740,150 crore.

Bankers say due to stubborn inflation, which has been above 9% for more than two years and registered at 9.89% in May this year, people are exhausting their savings to meet their expenses.

Additionally, due to the dollar crisis, import-export activities have been continuously decreasing over the last two years, resulting in a decline in deposits in accounts holding crores of taka.

The ongoing decline in export orders from foreign buyers and the increase in loan interest rates have also been cited as reasons for the decrease in deposits. Bankers noted that businesses are now grappling with heightened pressure to service their loans.

A senior official at Agrani Bank told The Business Standard that most accounts holding more than Tk1 crore belong to institutional depositors. Additionally, it is challenging to gauge the wealth of actual millionaires solely based on these accounts, as many individuals maintain relatively low balances in banks while accumulating assets such as land and flats.

He mentioned that high inflation is one of the reasons for the decrease in crore taka account holders. Inflation has been close to 10% over the last two years. Additionally, many banks have increased their loan interest rates to 15% starting in July 2023, up from the previous 9%. This has led to higher interest costs on traders’ loans, contributing to a decrease in their deposits.

According to central bank data, the number of millionaire account holders stood at 115,890 at the end of March 2024, down from 116,908 three months ago.

In April this year, most banks offered interest rates on customer deposits close to 13%, marking the highest in a decade. Despite these high interest rates, customer deposit growth slowed to 8.63%, the lowest in the last ten months.

According to central bank data, 92,516 accounts held deposits ranging from Tk1 crore to Tk5 crore, totalling Tk1.94 lakh crore, which accounts for 11.11% of the total deposits in the country’s banking system.

In addition, there are 1,812 accounts with deposits of Tk50 crore and above, totalling Tk2.5 lakh crore, which represents 15.46% of total bank deposits. Syed Mahbubur Rahman, managing director at Mutual Trust Bank, said most of these millionaire accounts belong to corporate institutions, and their deposits can fluctuate due to various factors.

“Due to inflation, the number of millionaire accounts has decreased, but not significantly. Deposits in individual accounts may also decrease somewhat due to inflation,” he added.

As of the end of March 2024, the total number of bank accounts in the country stood at 15.35 crore, with deposits in these accounts totalling Tk17.49 lakh crore.