NBFI Sector Sees Tk525 Crore Decline in Deposits

Summary:
Deposits in non-bank financial institutions (NBFIs) in Bangladesh dropped by Tk525 crore in the first quarter of the year, totaling Tk44,305 crore by the end of March—a 1.37% decrease from the previous quarter. This decline is attributed to prior sector irregularities and high classified loans, causing a loss of depositor confidence. Fixed deposits fell by Tk597 crore, with significant withdrawals by the private sector. Despite some NBFIs performing well, the sector struggles with a capped interest rate of 12.55%, while banks and government securities offer higher returns, making them more attractive. Inflation has also prompted small depositors to withdraw funds. In contrast, loans in the NBFI sector increased by 1.04% to Tk74,529 crore. Notably, 17 out of 35 financial institutions have default loan rates exceeding 50%, contributing to the sector’s challenges.