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Kamal: Interest rates cut on savings certificates will not affect small investors

  • Published at 05:20 pm September 22nd, 2021
Finance Minister AHM Mustafa Kamal -mehedi hasan
File Photo: Finance Minister AHM Mustafa Kamal Mehedi Hasan/Dhaka Tribune

'In recent times the government has noticed that all are coming to these savings tools due to the comparatively higher interest rates'

Finance Minister AHM Mustafa Kamal on Wednesday said that the recent interest rates cut on savings certificates would not affect the small and marginalized investors.

"With this cut in interest rates, the marginalized people and also those who keep small investment in savings certificates won't be affected," he said.

The Finance Minister said this while replying to a question during his briefing after the meetings on Cabinet Committee on Economic Affairs (CCEA) and the Cabinet Committee on Government Purchase (CCGP).

He said usually the savings certificates target the marginalized people and also the pensioners, but in recent times the government has noticed that all are coming to these savings tools due to the comparatively higher interest rates. "If such a trend continues, then the other drivers of the economy will become stagnant," he added.

Kamal said although the interest rates on savings certificates have been slashed, but there was no cut on the rates with investment of up to Tk15 lakh considering the marginalized section of people.

Also Read - Government reduces interest rates on savings certificates

"But, still the interest rates of savings certificates are higher than other deposits now prevail in market,"

The new rates will not affect the present investment and will only be applicable for fresh investments.

According to the new rules, which came into effect Tuesday, the higher the investment amount, the lower the returns will be. If the investment amount is higher than Tk15 lakh, investors will get a lower interest rate, according to a circular of the Internal Resources Division (IRD) of the Ministry of Finance.

Asked whether the government wants to discourage people towards savings tools, Kamal said the government wants to motivate those sections of people to savings tools who actually require those.

Citing an example, he said that the government does not want anyone to invest Tk1 crore in savings certificates, rather the investment could range between Tk1 lakh to Tk30 lakh and through this no one would be affected.

The Finance Minister said the recent cut in interest rates has been made considering the rates of deposits in other banks, and also the interest of the marginal investors.

He, however, informed that rationalization of the interest rates of the savings certificates is an ongoing process and the rates might go up or go down.

In the last fiscal year (FY21), savings certificates worth Tk112,188 crore were sold, up 67% year-on-year.

Net sales of the savings certificates were Tk41,959 crore and its growth was 190% year-on-year, according to the data of the Directorate of National Savings.

The government has allocated Tk62,000 crore for the current fiscal year to pay interest on domestic borrowings, up from Tk58,253 crore in the previous budget.

Asked about the mushrooming of the e-commerce firms, Kamal said that such e-commerce firms often appear before the country and people and thus tend to cheat with the commoners.

He said the ministries, divisions, and agencies concerned should take responsibility to deal with the issue.

Also Read - Savings certificates sales triples due to low bank deposit rates

Replying to another question about the progress on the government's move to the decentralization process, Kamal said that the government wants people to stay where they remain, especially in the rural areas to lessen pressure on the capital.

For this, he said there is necessary to increase manifold the rural infrastructures and civic facilities for which the government has been working tirelessly.