The net sales of national savings certificates turned negative in April this year amid the outbreak of coronavirus in the country and subsequent imposition of a nationwide shutdown by the government to contain the pandemic.
According to Bangladesh Bank data, the net sales of NSCs turned negative Tk 621 crore in April this year against Tk 3,741.28 crore in the same month last year.
In April, the Department of National Savings sold NSCs worth Tk 661.78 crore while it returned Tk 1,283.55 crore that included interest to the customers.
The NSD sells NSCs through the central bank, commercial banks and post offices across the country.
Bankers said that the sales of NSCs were almost suspended during the government-imposed shutdown from March 29 to May 30.
During the shutdown, all the NSC selling institutions performed their operations on a limited scale that resulted in negative NSC sales.
In terms of fresh investments, the government never before faced such a low amount of investments in savings tools in last 16 years.
According to the BB web site data, in November, 2004 the gross sales of savings certificates stood at Tk 676.65 crore.
The single-month highest investment was recorded in January, 2019 when the government sold NSCs worth Tk 9,726.63 crore.
In April last year the gross sales of savings tools stood at Tk 7,540.22 crore. In March, when the first cases of COVID-19 infection were detected in the country, the gross sales of national savings certificates stood at Tk 5,642 crore.
Due to payments of higher principal and profits, the net sales stood negative also in December last year after 80 months.
During the first 10 months (July-April) of the just concluded fiscal year 2019-2020, the government’s net borrowing from national savings schemes stood at Tk 10,580 crore, representing 88.72 per cent of the revised target of the government to meet budget target.
Between July and April of the 2019-20 fiscal year, the gross sales of savings certificates stood at Tk 54,578 crore and the interest payment and refund were Tk 43,997 crore.
The government lowered its borrowing target from the savings tools to meet the budget deficit in the just concluded fiscal year as it received low response from the sector.
A low target has also been set for this fiscal year of 2020-21.
In FY2019-20, the government had to cut the target to Tk 11,924 crore in the revised budget.
For FY21, finance minister AHM Mustafa Kamal has set a loan target of Tk 25,000 crore from non-banking sources, including Tk 20,000 crore from the savings instruments.
Data shows that during the July-March of FY 2018-19, the gross sales of national savings certificates stood at Tk 76,512 crore and the net sales were Tk 43,474 crore after paying interest and refunding the principal.
In FY20, the government also tightened the process of investing in the savings schemes.
From July 1 last year, the government brought four kinds of popular savings schemes under automation, and made e-TIN mandatory for investing over Tk 1 lakh in the savings tools.
A tax for investments of over Tk 5 lakh was also put in place.
Besides, the investment ceiling was set at Tk 50 lakh and Tk 1 crore for a person and a pensioner respectively.
The profit rate for the national savings schemes is still around 11 per cent whereas the interest rate for bank deposits is maximum 6 per cent.
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