The government’s net borrowing through the national savings tools fell by 71.10 per cent year-on-year in the immediate past fiscal year 2019-2020 due mainly to the tightened regulations on selling of the tools and the coronavirus outbreak in the country.
The net sales of national savings certificates dropped to Tk 14,428.35 crore in FY20 from Tk 49,939.48 crore in the fiscal year 2018-2019, according to the latest Bangladesh Bank data released on Thursday.
Due to the drastic fall in the NSCs sales, the government borrowed heavily from the banking sector to offset the deficit in its earnings through the National Board of Revenue.
The government borrowed Tk 85,321 crore from the banking system in FY20.
BB officials said that sales of the savings instruments dropped drastically due to the tightened rules and regulations on investment in savings certificates.
Dismal NSCs sales and huge encashment in March-May amid the COVID-19 outbreak also affected the overall annual figure of NSCs sales, they said.
Sales, however, rebounded in June with net sales standing at Tk 3,417.25 crore, rising from Tk 3,208 crore in June last year.
The government set its bank borrowing target at Tk 84,980 crore for FY21 in anticipation of lower NSCs sales in the year.
For FY21, the government’s borrowing target from savings certificates was set at Tk 20,000 crore.
The automation of NSCs sales made many investors jittery as they feared the procedure might result in scrutiny of their wealth by government agencies in future.
When NSCs sales were manual, it was very difficult for the government entities to track the NSCs holders but the launch of online sale of the national saving certificates has made tracking easy.
The profit rate for the national savings schemes still stands between 11-12 per cent whereas the interest rate on bank deposits is around 6 per cent.
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