Millionaire depositors withdrawing money

Amid the instability in the banking sector following Sheikh Hasina's departure from the country, a substantial amount of money has been withdrawn from banks. Between July and September alone, millionaire investors withdrew over Tk 26,000 crore, according to a report by the Bangladesh Bank.

The report reveals that due to withdrawals during this period, the balance of over 1,500 accounts has dropped below Tk 1 crore.

Industry insiders claim that the banking sector has been the hardest hit by the turmoil that began after August 5. Banks operating under S Alam's control, which follow Islamic principles, are reportedly in a dire state.

These banks have been propped up with liquidity support in various ways.

However, if even millionaires begin withdrawing their deposits, the liquidity crisis could deepen further.

Opinions differ on why the withdrawals are taking place. One group argues that depositors are losing trust in banks and withdrawing their money as a result. Another group suggests that depositors are shifting funds from weaker banks to safeguard their assets. Beyond these views, others claim that a significant portion of millionaires are withdrawing deposits to cope with inflationary pressures.

Bank officials suspect that once an interim government takes charge, Awami League leaders and their close associates might withdraw funds from banks. However, since customers’ political affiliations are not recorded in account-opening documents, it would be challenging to substantiate this claim with documentary evidence.

According to data from the central bank, the number of accounts with balances exceeding Tk 1 crore decreased by 1,657 during the third quarter of this year (July-September). During the same period, depositors withdrew Tk 26,187 crore from these accounts.

Data indicates that as of September 2024, the number of bank accounts with deposits exceeding Tk 1 crore stands at 117,127. These accounts collectively hold a total of Tk 7,46,867 crore. In the second quarter of this year (April-June), there were 118,784 such accounts, with a combined deposit of Tk 7,73,054 crore.

Economists suggest that while small depositors are withdrawing funds due to panic, weaker banks have failed to retain the funds of millionaires. Many individuals have also transferred money from weaker banks to stronger ones. As a result, consolidated funds in certain banks may have pushed account balances above the Tk 1 crore mark, potentially increasing the number of such accounts.

However, accounts holding over Tk 1 crore do not exclusively belong to millionaire individuals. Many organizations also maintain deposits exceeding this amount. Hence, "accounts with over Tk 1 crore" refers to both individuals and institutions. Moreover, there is no limit on the number of accounts an individual or institution can open. Consequently, a single individual or organization may hold multiple accounts. These also include accounts held by various government agencies and institutions.

Accurate data on the actual number of millionaires in the country is unavailable, making it difficult to determine how many people possess Tk 1 crore or more. However, the number of such bank accounts provides a general indication. The number of accounts with over Tk 1 crore has grown significantly since the COVID-19 pandemic.

According to central bank statistics, in 1975, there were only 47 accounts with balances exceeding Tk 1 crore. By 2015, this number had risen to 57,516. At the start of the COVID-19 pandemic in March 2020, the figure stood at 82,625, and it has now reached 117,127.