Surplus liquidity in Bangladesh’s banking sector has risen 39.40 per cent in a year as deposit growth outpaces weak credit demand.

The excess stood at Tk 4.08 trillion at the end of June, up from Tk 2.93 trillion in the same month last year, according to the latest Bangladesh Bank data.

It increased by Tk 712.28 billion, or 21.14 per cent, from May, when the surplus stood at Tk 3.37 trillion.

Overall liquidity in the banking sector grew 26.47 per cent over the year to Tk 7.42 trillion in June, from Tk 5.86 trillion a year earlier.

Banks were required to maintain Tk 3.27 trillion under cash reserve ratio and statutory liquidity ratio rules. Bangladesh Bank put excess liquidity at Tk 4.08 trillion.

Of the total liquidity, Tk 168 billion was held in foreign currency.

With private-sector credit demand weak, commercial banks are parking part of their surplus funds in Bangladesh Bank’s Standing Deposit Facility, or SDF.

Banks placed around Tk 1.5 trillion in the facility in June, a record for the sector, despite its 7.50 per cent interest rate being well below the call money rate.

The liquidity glut is unevenly distributed, however.

Some banks still rely on the call money market, interbank repos and Bangladesh Bank’s repo facility to meet short-term funding needs and manage daily operations.

Such borrowing rose from Tk 2.66 trillion in June 2025 to Tk 2.93 trillion in December before reaching Tk 3.97 trillion this June.

Mutual Trust Bank Managing Director Syed Mahbubur Rahman said shrinking investment opportunities could turn the growing liquidity surplus into a major challenge for banks.

Banks still have to pay interest to depositors even when they earn relatively little from idle funds, he said.

Shahjalal Islami Bank Managing Director Mosleh Uddin Ahmed said weak loan demand was swelling banks’ uninvested funds and could push lending rates below inflation.

He also pointed to the industrial fuel crisis as a factor behind the slowdown in credit growth.

Bangladesh Bank data shows private-sector credit growth fell to 4.53 per cent in June, while deposit growth stood at 10.74 per cent.