Amid long-standing uncertainty and a crisis of confidence in Bangladesh's banking sector, a noticeable shift is taking place: depositors are increasingly prioritizing the financial strength and governance of banks over high interest rates. Recent deposit growth patterns and non-performing loan (NPL) statistics reveal this emerging trend, analysts say, which serves both as an opportunity and a warning for the industry.
Changing Mindset Among Depositors: For years, many depositors chose banks based largely on the promise of higher interest rates. However, the recent pattern shows that customers are now carefully evaluating the overall health of banks before placing their money. Banks with low levels of non-performing loans, strong capital foundations, and comparatively stable management are attracting more deposits, while those struggling with governance and loan recovery are facing the risk of losing depositors.
“People are no longer depositing money indiscriminately just for higher interest,” said an analyst at Daily Industry. “They are looking at the bank's financial foundation, NPL ratios, and management quality before making decisions. Banks that fail to manage risk effectively are now losing ground.”
Historical Context: Legacy of Mismanagement: The current banking scenario reflects the impact of previous mismanagement and irregularities. During the tenure of the Awami League government, widespread corruption and embezzlement undermined confidence in the sector. Following political transitions in 2025, the full extent of these irregularities came to light.
According to Bangladesh Bank's latest figures, as of September 2025, the total distributed loans in the banking sector amounted to approximately Tk 18,03,840 crore. Of these, Tk 6,44,515 crore-or roughly 36%-had become non-performing. This high NPL ratio has been a primary factor prolonging the sector's crisis of confidence.
Banks with Strong Performance Gain Depositor Confidence: Not all banks are in the same situation. Several banks have maintained comparatively low NPL ratios and stronger governance, earning the trust of depositors. These include Citizens Bank, Eastern Bank, Bengal Commercial Bank, BRAC Bank, Prime Bank, City Bank, Midland Bank, Pubali Bank, Jamuna Bank, and Mutual Trust Bank. Their NPL ratios generally range between 1% and 7%, reflecting effective risk management practices.
Bangladesh Bank data show that from January to September 2025, City Bank led in deposit growth with a 23.4% increase, equating to approximately Tk 12,020 crore. The bank's non-performing loan ratio is just 4.76%, highlighting its financial discipline. BRAC Bank followed with a 20.68% growth in deposits, surpassing Tk 16,000 crore. Its NPL ratio stands at only 3.58%.
BRAC Bank: A Case Study in Stability: BRAC Bank's Managing Director and CEO, Tarek Refat Ullah Khan, told Daily Industry: “BRAC Bank is one of the safest banks in the country. We follow the principles laid out by Sir Fazle Hasan Abed, ensuring good governance, transparency, and strict regulatory compliance. Our depositors' funds are protected through proper risk management, and we maintain minimal NPLs by following prudent lending policies.”
He added that effective liquidity management and a strong financial foundation have further enhanced the bank's capability. BRAC Bank has also earned good credit ratings from reputable global agencies such as Moody's and S&P Global-the only domestic bank to do so-which has boosted its image and depositor trust. The bank also emphasizes customer service, offering round-the-clock access through branches, sub-branches, agent banking, ATMs, CRM services, and the “Asta” app, with ongoing technological innovation aimed at further improving service. “These factors are why depositors continue to trust and place money with us,” Khan said.
Other Banks Experiencing Healthy Growth: Pubali Bank recorded 14.72% deposit growth in the first nine months of 2025, ranking fifth in the sector. Its NPL ratio as of September stood at 5.5%. Eastern Bank, with a 13.68% deposit growth ranking seventh, maintains a low NPL ratio of 3.09%.
Since May 2024, Bangladesh Bank has allowed market-determined interest rates. Alongside rising lending rates, deposit rates also increased gradually. Data from Bangladesh Bank show that the average deposit rates at these four banks ranged between 5% and 7% during various months of 2025.
Regulators Observe Changing Depositor Behavior: Md. Arif Hossain Khan, Executive Director and Spokesperson of Bangladesh Bank, told Daily Industry: “The criteria for depositor confidence have changed. People no longer focus solely on higher interest rates; they now consider overall financial health, NPL management, and governance practices. This is positive news for the banking sector because it encourages banks to prioritize disciplined lending and transparency.”
He added that Bangladesh Bank continues to monitor the sector, taking measures to control NPLs, strengthen liquidity management, and protect depositor interests. Banks are now compelled to adopt stricter governance practices and focus on sustainable growth rather than high-risk lending for short-term gain.
Implications for the Banking Sector: The shift in depositor behavior could have far-reaching implications. Banks that fail to improve governance, risk management, and loan recovery could face declining deposits, threatening their solvency. Conversely, institutions with strong balance sheets, disciplined lending practices, and robust liquidity management are likely to see continued growth in deposits.
Financial analysts note that this change may gradually stabilize the sector. “Depositors are essentially sending a message: only banks that demonstrate financial discipline and strong governance deserve trust,” said a banking analyst at Daily Industry. “It incentivizes banks to improve risk management, reduce NPLs, and strengthen their capital base.”
Looking Ahead: With a combination of rising deposit awareness and regulatory oversight, the banking sector may gradually regain stability. The trend also underscores the importance of transparency, proper governance, and responsible lending practices in building long-term depositor trust.
Analysts suggest that banks could further capitalize on this shift by investing in technology, improving customer experience, and maintaining clear communication about financial performance. Such measures would not only attract deposits but also enhance the sector's overall resilience.
In conclusion, the changing mindset of depositors represents a turning point for Bangladesh's banking sector. High interest alone is no longer enough to secure deposits; financial stability, disciplined management, and strong governance are now the key determinants. Banks that understand and adapt to this new reality are likely to thrive, while those that fail to address structural weaknesses face growing risks.
