People continued to invest heavily in national savings certificates and bonds in the first month of the new fiscal year with net investment rising by 44.45 per cent in July compared with the figures of the same month of last fiscal year because of low bank rates.
According to the latest Directorate of National Savings data, the net investment in the savings instruments increased to Tk 5,053.54 crore in July of FY 2017-18 compared with that of Tk 3,498.37 crore in the same month of FY17.
The net investment in the national savings tools hit a fresh record of Tk 52,327 crore in the recently concluded fiscal year 2016-17 as rate of interest on the tools is almost double the rate of banks’ fixed deposit schemes.
In the budget for FY17, the government aimed to borrow Tk 19,610 crore from the NSCs, but it later revised the figure and set a borrowing target of Tk 45,000 crore.
Directorate of National Savings and Bangladesh Bank officials said people had been maintaining a huge investment in recent months as the government earlier hinted at lowering the rate on the tools with a view to reducing the interest rate gap between the NSCs and other rates of deposit products offered by the banks.
The government, however, is yet to take any final decision whether it will cut the rate on the tools, they said.
People are now being forced to invest their money in the savings tools as the banks are offering hardly 7 per cent interest rate on their deposit products.
The rates offered by the NSCs are between 11.04 per cent and 11.76 per cent, a BB official said.
Besides, a section of people including politicians and bureaucrats are also making huge investment to enjoy higher returns from the tools, he said.
The high returns on the savings tools are pushing up the government’s interest liability as the government usually borrows from treasury bills and bonds that carry interest rates between 2.84 per cent and 7.60 per cent to manage its deficit financing of the fiscal budget, he said.
Savings instruments worth Tk 7,352.11 crore were sold through banks, national savings bureaus and post offices in July FY18. Sales of the NSCs were worth Tk 4,932.37 crore in the same month a fiscal year ago.
The monthly net investment in the savings tools also hit all-time high at Tk 5,658 crore in June, this year.
The finance ministry recently asked the DNS verbally to supply 50 per cent deposit slips of the market demand to curb investment in the tools, a finance ministry official said.
Many clients failed to invest their money in the tools in the last few months due to shortage of the deposit slips in the banks, post offices and national savings bureaus, he said.
He said that the high net investment in the savings tools would continue this fiscal year if the government does not cut the rate on the savings tools.
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