Bangladesh's Banks Are Sitting on a Record Tk442,000 Crore They Cannot Lend Out

Bangladesh's banking system is sitting on its largest pile of unused cash on record. Central bank data for the end of August put surplus liquidity across the banking sector at Tk442,000 crore, after total liquid assets reached Tk781,214 crore against a statutory minimum requirement of only Tk339,260 crore. That gap, deposits banks have collected but cannot find a productive home for, has been widening for close to two years, and nothing in the latest numbers suggests it is about to close.

• Surplus liquidity in the banking system hit Tk442,000 crore at the end of August, according to Bangladesh Bank's Major Economic Indicators report.
• Conventional private banks hold the largest share of the surplus, Tk271,691 crore, with state owned banks holding Tk140,835 crore.
• The advance deposit ratio, which shows how much of every deposited taka actually gets lent out, has slid from a peak of 81.32 percent in September 2024 to 75.80 percent by the end of March 2026.
• Several major banks have cut one year fixed deposit rates twice in two months, with some now as low as 7.5 percent, below September's 8.34 percent inflation rate.

Where the Tk442,000 Crore Is Sitting

The surplus is not spread evenly across the industry. Conventional private commercial banks account for Tk271,691 crore of it, by far the largest slice, while state owned commercial banks hold Tk140,835 crore. Bank Asia, one of the mid sized private lenders, reported an advance to deposit ratio of roughly 60 percent, meaning it is lending out barely six out of every ten taka it takes in as deposits. The rest of that money is not disappearing. A large portion goes into government treasury bills and bonds, which at least earns banks a modest return while the state borrows cheaply, and part of it simply sits in accounts waiting for a borrower who has not shown up.

That unevenness matters. Bangladesh Bank has noted that while the sector as a whole looks flush with cash, several banks are still in genuine liquidity trouble because of long standing irregularities and weak balance sheets. A system wide surplus can coexist with individual banks that are effectively starved of deposits, which is one reason regulators have been reluctant to simply declare the liquidity glut a problem solved by itself.

Why Businesses Are Not Borrowing

The proximate cause is straightforward: private sector credit growth has stayed below 5 percent for more than six months, even as deposits kept growing at an average pace of 11.96 percent over the first eight months of the year, with some top tier banks adding deposits at 15 to 22 percent. Businesses that might otherwise borrow to expand are holding back, weighed down by elevated energy costs, cautious demand forecasts, and a general wait and see mood about the broader economy. Banks, for their part, have grown more selective about who they lend to after years of rising bad loans, which means some of the credit demand that does exist is simply not being approved.

Bangladesh Bank's own rate moves have added to the squeeze on bank margins rather than relieved it. The central bank's repo rate cut from 10 percent to 9.5 percent, intended partly to encourage cheaper borrowing, has coincided with falling yields on government securities, which in turn pulls down the returns banks earn on the treasury bills where they have been parking surplus cash. With margins thinner on that side too, cutting deposit rates is one of the few levers banks have left to protect profitability.

A Ratio That Keeps Sliding

The advance deposit ratio is the cleanest single number for tracking this squeeze. It stood at 80.38 percent in December 2023, climbed to a peak of 81.32 percent in September 2024, then began a steady retreat: 78.28 percent by September 2025, 77.72 percent by December 2025, and 75.80 percent by the end of March 2026. Each step down represents billions of taka in deposits that banks took in but did not convert into loans, credit cards, or working capital for businesses. For an economy that needs private investment to pick up growth, a falling ADR over a sustained stretch is not a reassuring signal, even if it comes wrapped in the seemingly positive story of "banks have plenty of cash."

What It Means for Your Money

For savers, the immediate effect is lower returns. Banks awash in deposits they cannot lend out have little incentive to compete hard for new fixed deposits, which is part of why several large banks have cut one year FDR rates twice in two months. Anyone comparing fixed deposit options across banks right now should expect a wider spread between weaker banks still chasing deposits with higher rates and stronger banks that no longer need to. A quick comparison with the site's FDR rate comparison tool or a check of likely returns with the FDR and DPS calculator is worth doing before rolling over a maturing deposit.

For borrowers, the picture is more mixed than "more cash means cheaper loans." Lending rates depend on a bank's risk appetite and cost structure as much as on how much spare cash it is holding, so a flush banking sector does not automatically translate into easier approval or lower EMIs. Still, economists argue that if the surplus persists, competitive pressure should eventually push loan pricing down for creditworthy borrowers, particularly in sectors banks consider safer bets.

"As interest rates drop, ordinary citizens, especially retired individuals, will come under pressure," said Fahmida Khatun, distinguished fellow at the Centre for Policy Dialogue, noting that in a market economy rates simply follow supply and demand.

"Earning lower returns remains a major challenge for depositors," said Mustafa K Mujeri, a former chief economist at Bangladesh Bank, who suggested savers consider National Savings Certificates or, for those willing to accept some risk, the capital market.

What Could Unstick the Money

Nearly everyone who studies this problem agrees on the diagnosis: a liquidity glut caused by weak demand cannot be fixed from the liquidity side alone. Private investment needs to recover, energy and gas supply constraints that have discouraged industrial expansion need to ease, and confidence in the broader economic outlook needs to firm up before businesses start borrowing at the pace banks would like. Until then, Bangladesh's banks look likely to keep collecting deposits faster than they can lend them, and the Tk442,000 crore sitting idle is likely to keep growing rather than shrink.