Kazi Zahidul Hasan :
A low interest rate on bank deposit schemes has forced people to put their money in public saving instruments, stimulating investment in the national saving certificates and bonds significantly.
According to an official figure of Directorate of National Savings (DNS) the net investment in the saving instruments increased to Tk 11,650.07 crore in the July-September period of the current financial year (2016-17) compared with Tk 6,612.43 crore during the corresponding period of the previous financial year (2015-16), showing an year-on-year increase by 76.18 per cent.
“Savers and pensioners are largely depositing their money into national savings tools following lower returns from bank deposit accounts,” Dr Salehuddin Ahmed, former Bangladesh Bank (BB) Governor, told The New Nation on Friday.
He said, people are largely thronging to invest in government saving tools for a higher yield.
“Banks are cutting their rates on deposit schemes and lending in the wake of sluggish investment demands from businesses,” he said, adding, “The trend is also forcing the banks to lose their deposits.”
Official sources said banks are now offering 5 percent to 6 percent interest to their clients for the fixed deposit schemes.
“A lower interest rate has reduced income of the bank depositors leading them to invest more in public saving certificates for a higher return,” Dr Khondoker Ibrahim Khaled, former BB Deputy Governor told The New Nation yesterday.
He said the interest rate on the government’s saving certificates and bonds is still much higher than that of the bank’s fixed deposit rates. The rate is ranging from 10 percent to 12 percent.
The government cut interest rates on the savings tools and bonds by 2 percent on May 23 last year.
“Clients’ rush for the government savings tools continued despite the rate cut. If the current investment trend continues, the government borrowing from the National Saving Certificates (NSCs) would cross the annual target soon,” he added.
In the budget for FY17, the government set an annual borrowing target of Tk 19,610 crore from the NSCs.
Khondoker Ibrahim Khaled, said the rising investment in the NSCs at the end would push up the government’s non-bank borrowing and it would put a systemic burden on the government for a high debt serving obligation.
A low interest rate on bank deposit schemes has forced people to put their money in public saving instruments, stimulating investment in the national saving certificates and bonds significantly.
According to an official figure of Directorate of National Savings (DNS) the net investment in the saving instruments increased to Tk 11,650.07 crore in the July-September period of the current financial year (2016-17) compared with Tk 6,612.43 crore during the corresponding period of the previous financial year (2015-16), showing an year-on-year increase by 76.18 per cent.
“Savers and pensioners are largely depositing their money into national savings tools following lower returns from bank deposit accounts,” Dr Salehuddin Ahmed, former Bangladesh Bank (BB) Governor, told The New Nation on Friday.
He said, people are largely thronging to invest in government saving tools for a higher yield.
“Banks are cutting their rates on deposit schemes and lending in the wake of sluggish investment demands from businesses,” he said, adding, “The trend is also forcing the banks to lose their deposits.”
Official sources said banks are now offering 5 percent to 6 percent interest to their clients for the fixed deposit schemes.
“A lower interest rate has reduced income of the bank depositors leading them to invest more in public saving certificates for a higher return,” Dr Khondoker Ibrahim Khaled, former BB Deputy Governor told The New Nation yesterday.
He said the interest rate on the government’s saving certificates and bonds is still much higher than that of the bank’s fixed deposit rates. The rate is ranging from 10 percent to 12 percent.
The government cut interest rates on the savings tools and bonds by 2 percent on May 23 last year.
“Clients’ rush for the government savings tools continued despite the rate cut. If the current investment trend continues, the government borrowing from the National Saving Certificates (NSCs) would cross the annual target soon,” he added.
In the budget for FY17, the government set an annual borrowing target of Tk 19,610 crore from the NSCs.
Khondoker Ibrahim Khaled, said the rising investment in the NSCs at the end would push up the government’s non-bank borrowing and it would put a systemic burden on the government for a high debt serving obligation.
