Over half the money in financial institutions belongs to millionaires

Over half of all the money deposited in financial institutions outside of the banks in Bangladesh, belongs to millionaires. At the end of December last year, the deposits in the country's financial institutions totalled Tk 448.3 billion (Tk 44,830 crore), of which over 55 per cent or Tk 248.76 billion (Tk 24,876 crore) was deposits of millionaires. These depositors have deposits ranging from Tk 10 million (Tk 1 crore) to Tk 150 billion (Tk 150 crore) in the financial institutions. There are six accounts with over Tk 1 billion (Tk 100 crore) each deposited in the financial institutions.  The deposits in these six accounts alone amount to around Tk 10 billion (Tk 1000 crore).

These figures were found in a report of Bangladesh Bank regarding the latest financial state of the financial institutions.  According to the report, there are 40 financial institutions in the country, including both private and specialised. Of these, 3 belong to the government, 32 under private ownership and 5 specialised financial institutions. At the end of December last year, there were 432,221 depositors' accounts in these 40 financial institutions. There were 425,934 depositors' accounts with deposits ranging from Tk 5000 to less than Tk 10 million (Tk 1 crore).

According to Bangladesh Bank's figures, around 55 per cent of the deposits in the financial institutions at the end of December last year was in just 1.25 per cent of the depositors' accounts. And 98.75 per cent of the depositors' accounts amounted to 44.5 per cent of the accounts. In other words, 425,934 of the depositors' together had Tk 199.54 billion (Tk 19,954 crore) deposited in the financial institutions. While just 5,287 depositors had Tk 248.76 billion (Tk 24,876 crore) deposited in the institutions.

Economists have for long been saying that the inequality in the country has taken on extreme proportions. A certain section of people have used their political clout to amass wealth. Meanwhile, spiralling living costs including high inflation has sent the middle class and lower middle class dipping into their savings. Economists see the prevailing degree of disparity as alarming. They recommend taxes to be imposed on the wealthy in order to close with wide gap.

Distinguished fellow of the Centre for Policy Dialogue (CPD), Mustafizur Rahman, recently told Prothom Alo that over the past few decades, several of the socioeconomic indicators in the country have fared well. People's living standards and income had increased. However, extreme injustice prevailed in the distribution of wealth. The gap between the rich and the poor was extreme. The steady widening of this financial inequality is evident in the figures regarding deposits in the financial institutions. On one hand the income of the limited income group is falling, and on the other the wealth of the influential, including businessmen, is growing steadily. This has no reflection of the inclusive society we has sought.

According to Bangladesh Bank records, around one-fifth of the deposits with the financial institutions was of account holders with deposits of Tk 10 million (Tk 1 crore) to Tk 50 million (Tk 5 crore). There are 4,148 deposit accounts in the financial institutions. At the end of December last year, the amount of deposits in these accounts was Tk 86.65 billion (Tk 8,665 crore), which was 19.33 per cent of the total deposits in these institutions. The second highest amount of deposits was in the accounts of depositors with deposits of Tk 50 million (Tk 5 crore) to Tk 100 million (Tk 10 crore). At the end of December, there were 669 such deposit accounts. The total amount of deposits in these accounts was around Tk 50 billion (Tk 5000 crore), that is, 11 per cent of the total deposits. In other words, at the end of last year, 30 per cent of all the deposits in the financial institutions ranged from Tk 10 million (Tk 1 crore) to Tk 100 million (Tk 10 crore) in these accounts.

Persons attached to the financial institutions said that the deposits in the financial institutions include personal deposits as well as company deposits. So the accounts with over Tk 10 million (Tk one crore) are not all personal accounts, but company accounts too.

Official figures show an extreme picture of disparity in the country. According to Bangladesh Bureau of Statistics (BBS), the 41 per cent of the total income in the country lies with the wealth 10 per cent. And the income of the poorest 10 per cent totalled only 1.10 per cent of the country's total income. This was revealed in BBS's 2022 household survey report. The same report stated that the inequality indicator Gini coefficient had increased to .499 points. If this exceeds .500 points in any country, this indicates high income disparity. Bangladesh has almost reached being a country with high income disparity.

Meanwhile, according to the BBS first household survey done in 1973-74, the wealthiest top 10 per cent in the country had 28.4 per cent of the total income of the country. In 1998-99 the top wealth 10 per cent held 31 per cent of the wealth. In increased further in 2010 to 36 per cent. Since then the income of the wealthiest section has been rapidly shooting up. In 2016, the wealthy top per cent held 38 per cent of the wealth. in 2022 it increased to 40.92 per cent. The richest 5 per cent among them now hold around 30 per cent of the country's wealth.

BBS records show that two thirds of the country's income is with the wealthy 30 per cent. The remaining 70 per cent of the people hold the remaining one third.

If this gap between the wealthy and the poor is to be lessened, then higher taxes must be imposed on the wealthy, said distinguished fellow of CPD Mustafizur Rahman. He said that the redistribution of wealth in our country is very weak. Normally such steps are adopted by means of financial policy. But no such system exists in our country. It is the wealthy who benefit from the financial policies here. So if the gap between the rich and the poor is to be lessened, higher taxes must be imposed on the wealth of the rich. If not, this situation will obstruct the advancement of the economy.