The government on Thursday slashed the interest rate on savings in post office by half to facilitate implementation of the single-digit interest rate in the country’s banking sector.
The Internal Resources Division of the finance ministry published a gazette notification by reducing the interest rate on investment in post office’s savings scheme with immediate effect.
According to the notification signed by the IRD senior secretary Abu Hena Md Rahmatul Muneem, interest rate on three-year fixed deposit was reduced to 6 per cent from 11.28 per cent on maturity.
The interest rate for the first year and second year of the deposit has been set at 5 per cent and 5.5 per cent from previous 10.20 per cent and 10.70 per cent respectively.
The interest rate on savings in ordinary accounts of post office has also reduced to 5 per cent from 7.5 per cent.
The IRD also reduced the interest rates to 4 per cent, 4.5 per cent and 5 per cent for each period of six months or over from the previous 9 per cent, 9.5 per cent and 10 per cent respectively.
The division amended the Post Office Savings Bank Rules in this connection.
Post office officials said that the interest cut would severely affect the people’s deposit in post office.
The overall investment in post office may drop to one-third, they said.
People can invest maximum Tk 30 lakh in single name account and Tk 60 lakh in joint accounts in the post office savings products, they added.
Finance ministry officials, however, said that the government took the decision to support the implementation of the decision of bringing down the deposit rate to 6 per cent and lending rate to 9 per cent in the banking sector.
The banking sector has been facing liquidity crisis thus resulting in drastic fall in private sector credit growth hitting 12-year low at 9.83 per cent in December, 2019.
For around two years, the government has been pressing the banks to implement the single-digit rates with a view to boost private sector investment in the country as lending from banks at higher interest rates hinder business expansion and increase cost of doing business.
As part of the implementation process, the government has already instructed private banks not to take any deposits of government agencies at above 6 per cent interest rate.
Finance minister AHM Mustafa Kamal on December 30, 2019 announced that the single-digit lending rate would be implemented from April 1, 2020 for all the loan products, excluding credit cards.
Bangladesh Post Office director general Sudhangshu Shekhar Bhadra told New Age that the amount of investment in post office would become one-third of the current amount due to reduction of interest rate.
According to the data of the National Savings Directorate, the net investment in post office was around Tk 8,000 crore in the last fiscal year 2018-2019.
Of the amount, people made investment more than Tk 7,500 crore in three-year fixed deposit accounts, the data showed.
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