The government’s net borrowing from the banking sector turned negative in the first quarter of this financial year because of a surge in the net investment by clients in the national savings certificates and bonds.
According to the latest Bangladesh Bank data, the government made no net borrowing from the banking sources in the July-September period of the FY 2016-17 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.
The government set a bank borrowing target of Tk 38,938 crore from the banking sector for FY17.
The government’s net borrowing from the banking sector stood at only Tk 4,807.50 crore in FY17 against the annual borrowing target of Tk 38,523 crore because of a surge in the net investment in NSCs.
A BB official told New Age on Thursday that the government had got a respite from the bank borrowing in last two years as the net investment in the national savings certificates and bonds maintained an upward trend.
The government aimed to borrow Tk 15,000 crore from the NSCs in FY16, but the net investment hit a fresh record at Tk 33,688.60 crore in last fiscal year.
The previous highest net investment in the saving tools was Tk 28,732.64 crore posted in FY15.
According to the latest Directorate of National Savings data, the net investment in the savings instruments also increased to Tk 7,795.57 crore in the July-September period of FY17 compared with that of Tk 4,627.19 crore in the same period of FY16.
A number of banks massively cut the rates of interest on the deposit products that had forced the client to invest in the NSCs, the BB official said.
Banks were forced to cut the rates of interest on deposit products due to a decreased loan disbursement in the industrial sector amid a dull business situation the country.
The maximum interest rate on NSCs is around 11.50 per cent while the bank rate on fixed deposit scheme is between 6 per cent and 7 per cent.
The BB official said that a low implementation rate of the annual development programme was another cause of the negative bank borrowing by the government.
The government agencies spent Tk 10,700 crore of the Tk 1,23,345 crore ADP in the first three months of this fiscal year.
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