Bank depositors in Bangladesh saw their real returns turn increasingly negative in 2025 as inflation remained higher than deposit interest rates, reducing the purchasing power of savings despite continued growth in overall bank deposits.
According to the Bangladesh Bank report “Banking Sector Update 2025”, the weighted average interest rate on deposits was around 6% during the year. In contrast, average inflation stayed within the 8% to 9% range. This persistent imbalance resulted in a negative real interest rate of approximately 2% to 3%, meaning depositors experienced a decline in the real value of their savings.
A depositor keeping Tk1 lakh in a bank account would earn about Tk6,000 in annual interest. However, inflation would reduce purchasing power by around Tk9,000 over the same period, leaving an estimated real loss of Tk3,000.
Deposit returns and inflation impact (2025)
| Item |
Value |
| Average deposit interest rate |
~6% |
| Average inflation rate |
8%–9% |
| Estimated real interest rate |
-2% to -3% |
| Interest on Tk1 lakh |
Tk6,000 |
| Inflation loss on Tk1 lakh |
Tk9,000 |
| Net real impact |
-Tk3,000 |
Despite this erosion of real returns, the banking sector remained profitable. Lending rates stayed above 12%, allowing banks to maintain a spread of more than 3% between lending and deposit rates. This spread helped offset operational expenses and provisioning requirements, particularly in a banking environment marked by non-performing loans.
Ezazul Islam, Director General of the Bangladesh Institute of Bank Management (BIBM), stated that while the overall weighted average return on deposits was negative, longer-term fixed deposits of one year or more still offered slightly positive real returns. However, he cautioned that currency depreciation could further weaken returns for savers and intensify inflationary pressures.
He noted that a weakening taka would raise import costs, pushing inflation higher and further reducing the real value of bank deposits, thereby making traditional savings less attractive in real terms.
Exchange rate movement and cost pressures
The taka began to depreciate gradually from March 2025, with the US dollar rising close to Tk123 after remaining stable at approximately Tk122.30 for several months. Central bank projections suggest the exchange rate could move towards Tk130, depending on market conditions and foreign exchange pressures.
At the same time, global energy price increases and disruptions in key shipping routes between the Gulf and Asia have contributed to higher import costs. These pressures have been transmitted into the domestic economy through rising production and transportation expenses.
Import-dependent industries have reported significant increases in input costs, in some cases ranging between 10% and 183%, depending on product categories and supply chain exposure. These developments have added further upward pressure on inflation.
Deposit growth despite negative returns
Even with negative real returns, total bank deposits grew by more than 11% in 2025, reaching Tk21 lakh crore compared with Tk18.8 lakh crore a year earlier. The growth was strongly supported by remittance inflows and continued reliance on the formal banking system.
The expansion was largely driven by small and medium-sized deposit accounts. Accounts holding up to Tk2 lakh and up to Tk25 lakh accounted for a significant portion of total deposit growth. Deposits in the Tk25 lakh segment rose from Tk5.52 lakh crore to Tk6.52 lakh crore over the year.
In contrast, the number of very large accounts above Tk25 crore declined, indicating a shift in the deposit structure towards smaller and middle-income savers.
The central bank report noted that despite negative real returns, deposit growth continued due to factors such as financial safety, accessibility, and remittance inflows, rather than purely interest-driven considerations. This trend reflects sustained confidence in the formal banking system.
Banking liquidity and lending trends
Banks remained profitable due to high lending rates and sustained interest spreads. However, credit growth slowed to 5.6%, while the advance-deposit ratio declined to 85.8% from 89.3% in the previous year, indicating higher liquidity buffers and more cautious lending behaviour.
Foreign banks recorded a contraction in lending, while some domestic banks maintained higher advance-deposit ratios, reflecting differing risk appetites. Overall, the banking system showed stronger liquidity positions but slower credit expansion amid tightening financial conditions.
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