Surplus liquidity in Bangladesh’s banking sector continued to rise amid weak investment demand, reaching Tk 4.42 lakh crore at the end of August 2026, according to Bangladesh Bank data.

The amount stood at Tk 4.23 lakh crore at the end of July and Tk 4.15 lakh crore at the end of June. Surplus liquidity was Tk 3.27 lakh crore at the end of December 2025, Tk 2.84 lakh crore at the end of June 2025 and Tk 1.94 lakh crore in June 2024.

Bankers said gas and electricity shortages, subdued investment demand and caution over lending amid efforts to curb defaulted loans had slowed private-sector credit growth. Annual private-sector credit growth fell to 4.75%, its lowest level on record, according to the report.

Banks are increasingly investing in treasury bills and bonds to lend to the government, considering them less risky than private-sector lending. This growing preference has also contributed to a decline in treasury bill and bond yields, which had remained in double digits for an extended period.

Surplus liquidity does not necessarily mean idle money. It refers to funds remaining after banks maintain their required statutory liquidity ratio (SLR). Conventional banks must maintain an SLR equivalent to 13% of deposits, while Shariah-based banks must maintain 4%. Both types of banks are also required to maintain a 4% cash reserve ratio (CRR).

Bankers said public confidence in the banking system was gradually recovering after several banks struggled to return deposits for an extended period. However, much of the returning money is being deposited with a limited number of financially stronger banks, even though they offer comparatively lower interest rates.

To protect depositors, Bangladesh Bank has recently set the maximum spread between lending and deposit rates at four percentage points. However, many banks have yet to comply with the directive and are discussing changes to their calculation methods with the central bank.

Despite the availability of funds, banks have shown limited interest in lending even at lower interest rates. Bangladesh Bank announced a Tk 60,000 crore stimulus package in May to boost business activity, but only Tk 11,960 crore had been disbursed by October 15.

Of the Tk 20,000 crore allocated for closed industrial and service-sector businesses, only Tk 561 crore had been distributed. Meanwhile, no funds had been disbursed from a Tk 10,000 crore allocation intended to support rural economic activities, youth employment, green factory transformation, export diversification, leather goods and footwear exports, and frozen shrimp exports.