The demand of savings certificates has been shooting up over the years, thanks to higher profits. Hence, the sales of savings instruments are on an upward trend.
Savings certificates see greater-than-expected sales every year compared to the target set by the government. Considering the fact, the finance ministry has formed a committee to control the sales. It will also re-fix the interest rate in coordination with commercial banks.
At present, commercial banks offer 7 percent for deposits whereas the rates for savings instruments are close to 12 percent. This implies that the interest against Tk 1 lakh stands at Tk 700 a month, though one can get Tk 960 in a month if one invests the amount in savings certificates.
The government is bearing the brunt for the situation as interest liability is shooting up.
Following the situation, the government in May last year slashed the profits of all kinds of savings certificates to 2 per cent. Finance minister then said that the interest rates would be adjusted within three months. But, the adjustment is yet to be made, even 15 months after the announcement.
However, finance minister formed a committee to re-set interest rates.
Contacted, Babul Kumar Saha, director general of National Savings Directorate, said they formed the committee headed by Additional Finance Secretary Nazmul Naazmus Sakib. The other members of the committee are from the National Board of Revenue, Bangladesh Bank, National Savings Directorate and other concerned government institutions.
The committee is expected to hold its maiden meeting on the issue in the first week of next month.
The sales of savings certificates failed to reach target in 2011-12 and 2012-14 fiscal years. The target in 2011-12 fiscal was set at Tk 6,000 crore while the sales volume stood at merely Tk 479 crore. In the following fiscal year, the situation was even worse with savings certificates worth Tk 772 crore being sold against a Tk 7,000 crore target.
But, the situation took a U-turn in the fiscal year 2013-14 with a record sale of Tk 11,707 cr, which was Tk 3,707cr more than the target then. The sales volume is even bigger in the following fiscal year. Savings certificates sales amounting to Tk 28,732 cr was registered against the target of Tk 21,000 crore over the period (2014-15).
The sales of savings certificates in the last two fiscal years (2014-15 and 2015-16) surpassed the target.
In the latest fiscal year the sales jumped to Tk 33,688 crore when the target was Tk28,000 crore . However, the government has set a target of Tk 19, 610 crore sales of savings certificates this fiscal year.
Speaking about the matter, former governor of Bangladesh Bank, Dr Salehuddin Ahmed told bbarta24.net that common people are availing in savings certificates.
“It will be a mistake if the government adjusts the interest rates of savings certificates with commercial banks’ deposit rates. Most of whom cannot afford to invest in bigger amount, prefers to invest in savings certificates,” he said.
So, the government must consider the interest of the greater portion of mass people investing through savings certificates, the banker said, adding, this will be illogical to off-limit the sales of savings certificates.