Kazi Zahidul Hasan :
Sales of savings instruments witnessed a big leap in the recent months following rush of small savers, pensioners and investors to invest in such instruments, sources said.
They said that most of the banks are now shy to accept saving deposits as their lending scope shrinks following sluggish investment climate in the country.
The sluggish investment climate also forced to pile up a huge amount of excess liquidity in the banks and forcing them to cut interests on deposits and lending. Thus, the depositors are not only being forced to withdraw their funds
from the banks but also look for alternative investment source.
According to the data of the Directorate of National Savings, the net investment in the national savings instruments shot up to Tk 6,820.99 crore in July-September period of the fiscal 2014-15 compared to Tk 2,097.47 crore in the same period of the last fiscal, showing an year-on year increase of above 225 percent.
“Banks have recently lowered their interest on mid and long-term deposits in the wake of sluggish lending. Such a situation forced the investors to find out an alternative investment source resulting in sharp rise in sales of savings toll,” former Bangladesh Bank (BB) governor Dr Salehuddin Ahmed told The New Nation yesterday.
He said, thousands of pensioners, small savers and other investors are on the run to invest in savings certificates expecting high returns. Besides, a certain amount of savings by pensioners has been made tax-free in the current budget, which also led to a rise in the sales of the savings instruments.
Now, most of the banks offer 8-9 percent interest for fixed deposits, down from 12-13 percent for the savings tools showing a difference of 4 to 5 percent.
“Small savers and pensioners have no option but to invest in savings certificates as the banks cut their interest rates on deposit,” said BB former deputy governor Dr Khondoker Ibrahim Khaled.
He added: Pensioners and savers are showing more interest in savings certificates emptying their bank deposits on the hope of high returns.
“The rise in sales of savings instruments has both the positive and negative impacts on the economy,” said Dr AB Mirza Azizul Islam, a former adviser of the caretaker government.
He said it will bring positives on the economy if the government utilizes the amount as internal borrowing to the productive purposes. In the financial point of view, the rise in sales of savings will push up the government’s expenditure on interest payment depriving the development needs of the country.
“Fund collection through sales of savings tools is the most expensive means of internal borrowing as the government has to allocate a huge chunk of money every year from revenue budget for interest payment,” he said.
The sum is about 20 percent of the revenue budget and out of the total percentage, 18 percent went to interest payment of internal borrowings, Mirza Azizul Islam noted.
Earlier, the government in the current fiscal has set a Tk 9,056 crore target for non-bank borrowing to meet the budget deficit.
When asked, he said, it is hard to rein in the abnormal rise in the sales of savings certificates. This is possible only if rates of interest on savings instruments are slashed. But the government may not take the risk considering political impact of it.
The initiative would have impact on common people who live on monthly income generating from their investments in savings tools.
