No good news for small savers as govt lowers postal savings ceiling

In a new development, the government has lowered the ceilings for investments under Post Office Savings Bank Scheme, dealing a blow to small savers.  

The investment ceiling in accounts held by a single individual has been reduced from Tk 30 lakh to Tk 10 lakh. And the upper limit of joint-investment has been reduced from Tk 60 lakh to Tk 20 lakh.

The Internal Resources Department of the Ministry of Finance on Thursday issued a notice signed on May 20. The notification said the order would be effective from the day it is issued.

An official of the department, who did not want to be named, said the interest rate on bank deposits is 6 percent while the interest rate on post office savings schemes or savings certificates is 11.28 percent; so many rich people are investing in this sector which is considered as social security sector.

Besides, the government has to pay more interest if it takes loans from this sector.

As the government's expenditure is increasing, he said, the government has taken this decision.

Meanwhile, the post office savings bank has introduced a system of opening online accounts to stop black money and excess investment. The new module of 'National Savings Scheme Online Management System' was inaugurated by Finance Minister AHM Mustafa Kamal on March 11.

As per the new module, an online account has to be opened while investing in the national savings scheme. And national identity card has been made mandatory for opening the accounts. More than Tk 2 lakh has to be deposited in the Post Office Savings Bank by cheque. An investor also needs to provide a copy of the e-TIN certificate. Those who have accounts will also be brought under the online database.

In the new development, the upper limit of investment has also been reduced.

On February 13, Internal Resources Department had issued a notification to reduce the interest rate of the post office savings scheme by almost half.

However, the reduction in interest rates on this savings scheme was widely criticised inside, outside and through social media within a month. In the face of criticism, the finance minister promised to reconsider the interest rate issue.

As per his assurance, the profit rate on general and term deposits of Post Office Savings Scheme has been reinstated. The department issued a notification in this regard on March 16 with immediate effect.

According to the revised circular, the interest rate on general accounts of the post office savings scheme will be 7.5 percent. Besides, the interest rate of the three-year post office savings scheme will be 11.28 percent. In case of redemption before maturity, the interest for the first year will be 10.20 percent and 10.70 percent in the second year.