Shawdesh Desk:

The amount of money outside the country’s banks has been on the rise in recent months as people are keeping additional cash in their hands amid inflationary pressure.

Bangladesh Bank data showed that the amount of cash outside the banking system stood at Tk 2,36,448 crore in June 2022 against Tk 2,09,517 crore in June 2021.

The amount has gradually increased since October 2021 when it was Tk 2,05,895 crore. It jumped to record Tk 2,36,791 crore in April. The amount was Tk 2,25,148 crore in May.

General inflation shot up to 6.29 per cent in April, which was the highest in 18 months.

In June, inflation reached 7.56 per cent which was the highest after nine years amid persistently high food prices and non-food prices.

In December 2021, general inflation crossed 6 per cent for the first time in 14 months.

It was observed that the amount of cash outside banks or cash in hands was the highest in April when people was struggling with rising commodity prices.

After the Russia-Ukraine war began March, the economy was hit by global supply chain disruption, hike in raw materials, currency devaluation and commodity price spiral.

People wanted to have more cash money in their hands in recent months as a precautionary measure, said bankers.

They said that an increased amount of cash in hands limited money circulation in the banking system.

Bangladesh Bank chief economist Md Habibur Rahman told New Age that the amount of cash outside banks might grow further due to inflationary pressure.

People may want to keep cash money in their hands for meeting high expenditures, he said.

He also said that currency outside banks usually rose when the amount of excess liquidity or money supply in the banks increased.

The circulation of M2 broad money increased by 9.43 per cent or Tk 1,47,227 crore in July-June of 2022.

M2 increased to Tk 17,08,122 crore at the end of June 2022 from Tk 15,60,895 crore in June in the previous year.

Reserve money was Tk 3,56,736 crore in June 2022 against Tk 3,50,797 crore in June 2021.

Besides, a section of people with surplus funds stayed away from banks due to lower interest rates.

The weighted average interest rate on deposits of all banks declined to 3.97 per cent in June of FY22 compared with that in the previous month.

Money multiplier rose to 4.92 at the end of June 2022 from 4.48 at the end of June 2021.

The bankers said that more money remained outside the banking system and so more transactions would take place in cash.