Bangladesh Pays Tk 1.70 Lakh Crore a Year for Its Cash Habit, Central Bank Study Finds
Uncollected taxes from informal transactions account for more than half of the estimated burden, while banks and consumers also bear significant costs.
Bangladesh's continued heavy use of physical currency carries an annual economic cost of roughly Tk 1.70 lakh crore, equal to 3.24 percent of gross domestic product, according to a Bangladesh Bank study that measures both direct handling expenses and wider opportunity costs.
The largest share of that burden comes from tax revenue that remains uncollected because of informal transactions. This shadow-economy component is estimated at about Tk 93,300 crore, or 1.77 percent of GDP, and accounts for more than half of the total.
Commercial banks absorb approximately Tk 36,800 crore through the vaults, transport networks, security arrangements and branch infrastructure needed to keep notes and coins circulating. Consumers face roughly Tk 28,000 crore in lost time, forgone interest on cash holdings and exposure to theft or loss. Micro-merchants, microfinance institutions and other intermediaries account for the remainder.
Cash still settles around three-quarters of retail transactions. The pattern sustains itself: consumers offer notes because many sellers accept only cash, while sellers insist on cash because their suppliers do the same. Digital channels have expanded, yet practical obstacles limit their use.
Merchant fees can erase slim margins on small sales. Card payments often settle the next day, locking up working capital. Mobile-money accounts carry daily transfer ceilings. Internet coverage is uneven outside cities. Concerns about fraud and low financial literacy further slow adoption; the study notes that only about 28 percent of adults are financially literate and that many mobile-money users still need help operating their accounts.
Even after removing the shadow-economy losses, the remaining costs of cash equal roughly 1.47 percent of GDP—several times higher than the unit cost of digital payments. Per-capita comparisons place Bangladesh alongside other cash-intensive developing economies, though the absolute figure is high relative to the reach of formal financial services. The assessment was completed earlier in the year and has received wider attention in recent days.
For policymakers the numbers add weight to ongoing efforts to make digital payments cheaper and more reliable. Lower merchant fees, faster settlement, better interoperability and stronger consumer protection could shift a meaningful volume of transactions away from cash. Each sustained drop in cash intensity would free resources measured in tens of thousands of crore taka that are now absorbed by logistics, security and uncollected taxes.
Businesses that still depend heavily on cash for payroll, supplier payments or retail collections face higher handling costs and greater operational risk than peers that have moved further toward digital rails. Households, especially lower-income ones, lose time and potential interest while remaining more exposed to loss. At the national level a large cash economy also makes it harder to widen the tax base and improve the accuracy of economic data.The study does not argue that cash should vanish.
It shows that the present scale of cash use carries a clear, measurable price paid across the economy. How quickly that price declines will depend on whether merchant incentives improve, whether digital skills expand and whether users gain greater confidence that electronic payments are both convenient and secure. The Bangladesh Bank's figures provide a concrete baseline against which future shifts can be measured.