These idle deposits are earning huge amounts of interest for these institutions. Even though there is a financial crisis, the government cannot use these deposits.

Experts blame this on the lack of a proper policy.

Experts say the Ministry of Finance has no clear policy regarding these funds. It is unclear how much should be kept in deposits, how much should go to the government treasury, or how the interest earnings should be used. They suggest that the government formulate a clear policy.

They also warn that if the government borrows too much from banks, it will limit funds for the private sector and increase the government’s interest payment burden.

According to Bangladesh Bank, as of October-December 2024, state-owned institutions had deposited BDT 2.13939 trillion in various banks. This includes BDT 144.25 billion in current accounts, BDT 24.51 billion in savings accounts, BDT 774.57 billion in special notice deposits, BDT 1.15232 trillion in fixed deposits, and BDT 43.74 billion in other deposits.

State-owned institutions are increasing their bank deposits mainly due to rising interest income. At the beginning of the 2023-24 fiscal year, Bangladesh Bank introduced a contractionary monetary policy to control high inflation. As part of this, the central bank raised the policy interest rate (repo rate) from 5 percent to 10 percent. Since then, bank loan interest rates have been rising continuously. The current rate has reached 15-16 percent. State-owned institutions are taking advantage of these high interest rates, increasing interest income.

Padma Oil Company Limited is a state-owned enterprise engaged in fuel oil marketing. From July to December 2024, the company earned BDT 2.49 billion in interest from bank deposits. In the same period of the previous year, this income was BDT 1.72 billion. Due to rising interest rates, the company’s earnings from this sector increased by almost 45 percent in just one year.

Companies like Padma Oil primarily earn revenue from fuel sales commissions. However, the company’s interest income from bank deposits has surpassed its fuel sales commission earnings. According to its financial report, from July to December 2023, Padma Oil earned BDT 1.62 billion from fuel sales commissions. In the same period of the previous year, this income was BDT 1.36 billion. Like Padma Oil, other state-owned fuel marketing companies now generate most of their income from interest on bank deposits.

On one hand, the government’s dependence on banks is increasing. On the other hand, the government cannot utilize the idle funds of state-owned institutions. Industry analysts blame the absence of a clear policy for this issue. As a result, these institutions keep their money in banks and earn interest instead of using it.

Dr. Mustafa K. Mujeri, Executive Director of the Institute of Inclusive Finance and Development (INM), told Bonik Barta, “In the past, the government took funds from some state-owned institutions. However, it could not collect money from all of them. The reason is the absence of a clear policy on how much money should be kept in the bank, how much should be given to the government, or how the interest income should be used. As a result, these institutions deposit money in banks under various excuses and earn interest. The Ministry of Finance should introduce a clear policy regarding this.”

Meanwhile, the government’s borrowing from the banking system is increasing. In the first six months (July-December) of the 2024-25 fiscal year, the government borrowed BDT 67.44 billion from banks. Banks have done this, and the government’s borrowing from non-bank sources has also increased. During July-December of the current fiscal year, the government borrowed BDT 246.88 billion from non-bank sources. In comparison, during the same period of the previous fiscal year, the net loan was BDT 70.90 billion. This shows that the government’s dependence on both bank and non-bank sectors is rising.

For a long time, the main source of income for banks in the country was the private sector. Banks profited from interest and commissions on loans from the industrial and service sectors. However, the government sector has become the primary source of income and profit for banks. Banks are now lending more to the government instead of the private sector, which is helping most banks earn higher profits.

Industry experts say that the private sector is deprived when the government borrows more from banks. Additionally, the government’s interest payment burden also increases. That is why they emphasize the need for strong financial management.

Fahmida Khatun, Executive Director of the Center for Policy Dialogue (CPD), told Bonik Barta, “The government’s development and operational expenses are increasing. But revenue is not growing at the same rate. As a result, the government is borrowing more from banks. This is increasing the government’s interest burden. At the same time, the private sector is unable to take loans. For many years, we have been in a weak economic system because we could not increase the circulation of resources. The government needs to take steps to strengthen this management. Many state-owned institutions are running at a loss. However, the government can take funds from those who earn money and deposit it in banks. The government can later return this money.”

Even though state-owned institutions' bank deposits have grown significantly, their total loan amount is only BDT 339.26 billion. In contrast, their fixed deposits alone exceed BDT 1.15 trillion. This means that their fixed deposits are more than three times their total loans.