A staggering Tk 25,000 crore flew out of the banking system in March, marking one of the sharpest monthly jumps in recent times as customers scrambled for cash ahead of Eid-ul-Fitr and amid growing unease over rumoured bank mergers.
According to the latest Bangladesh Bank data, cash outside the banking system soared to Tk 2,96,431 crore in March, up from Tk 2,71,495 crore in February - a single-month spike of Tk 24,936 crore. The trend reversed the earlier decline in January and February, when cash withdrawals had been tapering.
Analysts point to a combination of seasonal and psychological factors: the Ramadan-driven consumer surge, hefty festival spending, and a wave of uncertainty triggered by talk of forced bank consolidations, prompting many customers to pull their deposits out - fast.
"Eid is the season of gifting, shopping, and giving. People withdraw heavily for family purchases, charity, and Zakat," said Syed Abu Naser Bukhtear Ahmed, Chairman of Agrani Bank PLC. "Add to that the remittance inflows from abroad, and the pressure on bank cash reserves spikes dramatically."
But it wasn't just customers tightening their grip on cash. Bangladesh Bank also stepped in to pump liquidity into the system. The amount of money printed and supplied in the market rose to Tk 4,02,733 crore in March, up from Tk 3,74,602 crore in February and Tk 3,78,708 crore in January, according to central bank data.
Likewise, currency in active circulation - money being physically exchanged in the economy - leapt to Tk 3,21,160 crore in March, compared to Tk 2,98,382 crore in February and Tk 2,99,510 crore in January.
The sharp surge mirrors a similar pattern seen last year, though with even higher intensity this time. From Tk 2,99,000 crore in August 2023, cash levels had dipped to Tk 2,76,371 crore by December, only to rebound swiftly this March.
Experts warn that this growing reliance on physical cash - whether due to cultural habits or concerns about banking stability - is a red flag.
"Confidence in the banking sector is yet to be fully restored," said an analyst, pointing to years of mismanagement, corruption, and financial scandals that tainted several banks during the previous government's tenure.
The long-standing 9% interest cap on deposits had also disincentivized savings and dried up liquidity. Although the cap has now been lifted, bringing some relief to banks, the after-effects linger.
Economists caution that while the central bank's cash injections are temporarily bridging the gap, an oversupply of printed money poses a significant inflationary risk if not managed prudently.
"If this trend of mass cash withdrawal and excess printing continues, it could seriously strain financial stability," warned a senior economist. "The solution lies not in more cash, but in restoring trust and ensuring integrity within the financial system."
As Bangladesh navigates its complex economic path - balancing religious festivity with financial fragility - March's cash surge sends a powerful signal: without deep-rooted reforms, faith in the system may continue to leak, just like the money from the vaults.
