Badrul Ahsan :
People who used to meet their regular expenditure with the returns from bank deposits are facing hurdles because of continued slide in interest rate against savings.
The depositors’ plight has also worsened after the government in the proposed budget for the 2017-18 fiscal year raised the excise duty on the bank accounts.
According to Bangladesh Bank (BB) data, the interest rate on deposit slid below 5 per cent in April on the back of a surge in excess liquidity in the banking sector amid a lower loan disbursement by the banks due to the ongoing dull business situation in the country.
The central bank data also showed that the weighted average rate on the deposit stood at 4.97 per cent in April, down from 5.01 per cent in March.
The weighted average rate on deposit came down below 6 per cent in March, 2016 and the rate continued to decrease almost every month in the last two years.
“Depositors still depend on banks to keep their money safe, thinking that the returns from their savings would help them mitigate any financial problem, but the continued slide in the deposit rate coupled with the upcoming increased excise duty has thrown the clients into worries,” a high official at the central bank told The New Nation, preferring anonymity.
Finance Minister AMA Muhith, however, in his budget speech proposed accounts with balance of up to Tk 1 lakh to be exempted from excise duty.
An excise duty of Tk 800 would be imposed on debit or credit balance exceeding Tk 1 lakh but less than Tk 10 lakh, up from the existing such duty of Tk 500.
For balance between Tk 10 lakh and Tk 1 crore, the excise duty would be Tk 2,500, about 67 per cent higher than the current rate.
The clients would have to count a higher excise duty on the balance exceeding Tk 1 crore with their accounts.
However, due to the lower deposit rates at banks, people have been investing heavily in the national savings certificates and bonds in the recent period as the rates of interest on the tools are between 11.04 per cent and 11.76 per cent.
The net investment in the government tools surpassed Tk 40,000 crore in the first 10 months of FY17, which is a fresh record on the basis of annual investment.
But, the government has taken decision to cut the interest rates on the government tools within two months with the aim of creating a balance between bank deposit rates and government tools’ rates.
In such a situation, the depositors would have to face more difficulties in choosing their deposit destination due to the lower rates both for banks’ products and government tools, the BB official cautioned.
