• Tuesday, Jan 31, 2023
  • Last Update : 10:24 am

Savings certificates sales triples due to low bank deposit rates

  • Published at 02:41 pm August 30th, 2021
File photo shows a general view of a bank branch Dhaka Tribune

The latest DNS data shows that the highest net sales in FY2020-21 were Tk5,215 crore in January

  • Total sales Tk1,12,188 crore in FY2020-21
  • Net sales in January and June were Tk5,215 crore and Tk4,584 crore respectively
  • FY2019-20 net sales were Tk14,428 crore
  • FY2020-21 net sales were Tk42,000 crore

The sale of savings certificates almost tripled in a year. Experts believe that this is largely due to the pandemic and low bank deposit rates.

According to the latest data from the Directorate of National Savings (DNS), after a lukewarm performance in FY2019-20, savings certificates with a net worth around Tk42,000 crore were sold in FY2020-21, which was a net Tk14,428 crore in the last year.

Also Read - NBR steps in to stop misuse of tax rebate on savings certificates

Meanwhile, the second-highest sales of savings certificates were in June, the last month of the fiscal year 2020-21. 

According to DNS data, the government has collected Tk1 lakh 12,188 crore from savings certificates in the outgoing 2020-21 financial year. At the same time, Tk70,227.70 crore has been paid for the profit of the savings certificates sold. 

As such, the net debt of the government from the savings certificate of the last financial year is Tk41,959.54 crore. This net is calculated by deducting the profit from the total sales and the amount paid for the original.

Speaking to Dhaka Tribune, AB Mirza Azizul Islam, economist and financial adviser to the former caretaker government said: “Amid the pandemic, savings certificates provide a better investment option than bank deposits. Because of the lower yield on banks saving deposits, it may happen.”

“The Bangladesh Bank already made a decision that deposit interest shouldn’t go below the inflation rate. Time will say whether people get interested in bank deposits again or not,” he added.  

However, there still remains a level of disparity as ordinary investors receive a certain interest on savings certificates, while ministers, MPs and other VIPs also receive the same interest. “The government should address this disparity to boost more sales,” the economist added.

Ahsan H Mansoor, executive director of the Policy Research Institute (PRI), a private research institute, told the media that, due to the self-interest of the policymakers, the people have to bear the high burden of interest on savings certificates every year. 

Speaking of the poor and the elderly, this high interest is being maintained.

“However, our research has shown long ago that billionaire customers are the main beneficiaries of high-interest rates on savings certificates,” he added.

Also Read - Bangladesh Bank will not allow deposit rate below inflation

The latest DNS data shows that the highest net sales in FY2020-21 were Tk5,215 crore in January.

Data analysis shows that taxpayers' identification number (TIN) certificate was made mandatory for purchase over Tk1 lakh from July 2019. However, the minimum bar for purchase with a TIN certificate has been raised from Tk1 lakh to Tk2 lakh in the current FY2021-22.

While a 5% source tax on profits of the savings certificates was also introduced, if the investment was more than Tk10 lakh, the source tax becomes 10%. Having a bank account was also made mandatory.

After that, the sales of savings certificates began to decrease. But in the last financial year, it went up again.

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