Written by The Banking Post
The volume of un-invested cash in the banking system keeps rising in recent months, signaling a slow rebound in the liquidity situations in banks amid prevailing lower investment regime.
Officials and money market experts said the inflow of deposits in the banking channel continues to increase after a downward trend but the existing investment avenues keeps shrinking because of the economic sluggishness.
As a matter of fact, the volume of the cash that remains in the bank vaults has been increasing, according to them.
Commercial banks normally keep a portion of liquidity in their vaults to meet their day-to-day financing needs of the depositors, which is being called un-invested cash.
The banking industry saw a massive fall in such money stock after the July-August mass uprising that toppled Sheikh Hasina’s governing regime.
After the changeover in state power, massive loan-related irregularities in several commercial banks, mostly unconventional ones, came into media spotlight, triggering panic withdrawal of deposits. As a matter of fact, un-invested cash levels in the bank vaults came under extreme pressure.
According to data with the Bangladesh Bank (BB), the volume of uninvested excess cash in the banking system stood at Tk 193.29 billion at the end of June 2024.
The figure rose to Tk 269 billion, Tk 268 billion and Tk 319 billion in January, March and June in 2025, according to the data.
Executive director (grade-1) of the banking regulator Dr. Md Ezazul Islam said the banking industry sees a significant growth in deposits in recent times but they cannot invest those because of the lower credit demand by the private sector.
On the other hand, he said, the central bank as part of its forex (foreign exchange) market intervention strategy injected a good volume of liquidity to the banks in the form of buying foreign currencies in recent times,
“These factors basically help improve liquidity situations in majority of the banks. That’s why, the volume of such un-invested cash is rising,” Dr. Islam, who leads monetary policy department of the banking regulator, said.
The banking regulator has so far purchased $2126 million from the banks since July 13 last and injected around Tk 259 billion in exchange to the market to keep the exchange rate stable, according to the BB sources.
According to the BB data, the volume of currency outside banks dropped to Tk 2.76 trillion in August last from Tk 2.96 trillion recorded in June in 2025.
The data showed that the deposit growth in the banking system rose to 10.01 per cent in August, 2025 from June’s count of 7.77 per cent. The private sector credit growth plummeted to 6.35 per cent in August last from 9.86 per cent recorded a year ago.
