Regional Disparity in Banking Stark: Dhaka Division Alone Holds 60% of Deposits and 68% of Loans
Banking activity is not spread evenly across the country. In some places huge deposits are accumulating in banks and most loans are being disbursed, while in some divisions both deposits and loans are very low. As a result, a large gap has emerged between regions in access to banking services.
According to Bangladesh Bank data, 60.59 percent of the country's total deposits and 67.84 percent of total loans are concentrated in Dhaka Division alone. Including Chattogram Division, the two divisions hold 81.34 percent of total deposits and about 87 percent of loans.
By contrast, Mymensingh holds only 1.71 percent of total deposits. And loans disbursed in Sylhet amount to just 1.03 percent of the country's total loans. These figures lay bare the regional disparity in banking activity.
According to the central bank's updated June-quarter report, total deposits in the banking sector stood at Tk 22,10,444 crore at the end of June this year. Of that, Tk 13,39,311 crore was deposited in Dhaka Division alone.
Deposits in Dhaka Division rose by 2.84 percent compared with the previous quarter. Moreover, 54.98 percent of this division's total deposits came from urban areas.
At the same time, the total outstanding loans in the banking sector were Tk 18,08,738 crore. Of that, Tk 12,27,035 crore was disbursed in Dhaka Division. In other words, nearly two-thirds of the country's bank loans go to Dhaka Division alone.
Chattogram Division ranks after Dhaka in both deposits and loans. At the end of June, deposits there were Tk 4,58,765 crore, or 20.75 percent of the total. Outstanding loans were Tk 3,46,277 crore, or 19.14 percent of the total.
The picture in the remaining divisions is quite disappointing. Khulna Division has deposits of Tk 99,959 crore and outstanding loans of Tk 67,227 crore. Rajshahi Division has deposits of Tk 94,375 crore and loans of Tk 66,259 crore.
Sylhet Division has deposits of Tk 88,624 crore. But outstanding loans there are only Tk 18,572 crore, just 1.03 percent of the country's total loans — an example of a large gap in loan disbursement compared with deposits.
This concentration is affecting the expansion of business and trade, the setting up of industry and the creation of employment. The scope for increasing investment in lagging regions is also being limited by it.
This concentration of banking activity is not merely a difference in statistics; it also reflects the geographical inequality of the country's economic activity. Where there are more factories, large businesses, corporate offices and commercial activity, loan demand rises alongside deposits.
Even within Dhaka, deposit collection is concentrated in a few commercial areas. According to the Bangladesh Bank report, deposits are rising in Gulshan alongside Motijheel because of large industrial and corporate activity. Banani, Dhanmondi, Paltan and Tejgaon follow.
Senior economist and former Bangladesh Bank chief economist Dr Mustafa K Mujeri said economic activity centred on Dhaka and Chattogram is creating unbalanced development in the country. People are rushing to these two regions in hope of employment and economic opportunity.
In his view, this is increasing population pressure and congestion in Dhaka, while desired development is not happening in other regions. To ensure balanced development across the country, banks need to pay more attention to creating entrepreneurs in marginal and remote areas, especially by increasing loan flows to small and medium industry.
Overall, those concerned believe regional disparity will grow further if this concentration of deposits and loans cannot be reduced. How far banks come forward to create entrepreneurs and disburse loans in lagging regions is now the question to watch.
