Net investment in the national savings certificates and bonds increased by 76.18 per cent in the first quarter of this current fiscal year (2016-17) compared with that in the orresponding period of FY16 thanks to low bank rates for deposit products.
According to the latest Directorate of National Savings data, the net investment in the savings instruments increased to Tk 11,650.07 crore in
the July-September period of FY17 compared with that of Tk 6,612.43 crore during the same period of FY16.
A DNS official told New Age on Thursday that despite the rate cut by the government for the savings tools on May 23 last year, clients’ rush for the tools continued as the interest rate for the savings certificates and bonds was still much higher than that of the banks’ deposit products.
The government borrowing from the NSCs would cross the annual target within the first half of FY17 if the existing investment trend continues, he said.
In the budget for FY17, the government set an annual borrowing target of Tk 19,610 crore from the NSCs.
The net investment in the savings tools also increased by 86.63 per cent to Tk 3,854.50 crore in September compared with that of Tk 2,065.24 crore in the same month a fiscal year ago.
The DNS data showed that the monthly net investment in the national savings certificates and bonds had hit its all-time high at Tk 4,297.20 crore in August this year.
The net investment in the national savings tools had hit a fresh record at Tk 33,688.60 crore in FY16 against the government’s NSC borrowing target of Tk 15,000 crore as the rate of interest on the tools is almost double than the rate of interest on banks’ fixed deposit schemes.
On May 23, 2015, the government cut the rate of interest by around 2 per cent on its different savings tools to contain the upward investment trend, the DNS official said.
He said the government faced pressure in paying interest to the clients who invested in the NSCs in recent years as the interest rate for the savings tools is between 11.04 per cent and 12 per cent.
Banks are now offering interest rates ranging from 6 per cent to 7 per cent to their clients for the fixed deposit schemes.
Banks are still continuing to cut the rates of interest on their deposit products as they have been facing excess liquidity in recent years due to a lower credit demand from
the industrial sector amid dull business, the official said.
The savings instruments worth Tk 16,650.15 crore were sold through banks, national savings bureaus and post offices in the
July-September period of FY17 whereas the sales of the NSCs were Tk 11,216.84 crore in worth in the same period a fiscal year ago.
Due to the higher net investment in the national savings certificates and bonds, the government borrowing from the banking source decreased significantly in recent months.
According to the latest Bangladesh Bank data, the government made no net borrowing from the banking sources in the July-September period of FY17 but made net repayment of Tk 5,146.13 crore in the period.
The BB data showed that the government borrowed Tk 4,196.40 crore from the BB in the first quarter of FY17 while it repaid the scheduled banks Tk 9,342.52 crore against its previous loans, making the government’s overall bank borrowing negative of Tk 5,146.13 crore.
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