Savings tools sales dip 81% in July

The net sales of national savings certificates dipped by 81.31 per cent in July due mainly to interest rate cuts and restrictions on purchasing.

In the first month of this fiscal year, the net sales of state-owned savings instruments were Tk 393.11 crore, down from Tk 2,104 crore in the same month of the previous fiscal year, the national savings department data shows.

Officials at the central bank said the government recently reduced the yield rates on savings instruments, which could be the main reason behind the drastic fall in their sales. Yields on almost all savings schemes were slashed by up to 2 per cent on September 21 last year. But investments below Tk 15 lakh were allowed to enjoy the previous interest rates.

According to a circular issued by the Internal Resources Division of the finance ministry at the time, the new interest rates would be applicable to individual and institutional investors for investments of over Tk 15 lakh.

Officials at the Bangladesh Bank said savings tools sales might decrease further in the coming months.

Industry insiders said savers are no longer interested in re-investing their funds after maturity due to the present economic condition as well as various restrictions on purchasing savings tools. 

In the FY20 budget, the government imposed a 5 per cent tax at source on the interest on national savings certificates of up to Tk 5 lakh. It also levied a 10 per cent tax at source on investing in such schemes of above Tk 5 lakh. These are still effective in the current fiscal year. According to the government’s rules, those investing in savings instruments now need to submit copies of their electronic taxpayer identification number (e-TIN) and the national ID. Also, to invest more than Tk 1 lakh, they must pay through a bank cheque.

The government set a target to borrow Tk 35,000 crore against savings instruments for the current fiscal year.