Badrul Ahsan :
Lower interest rates on bank deposit pushed depositors to opt for National Savings Certificates (NSC) largely, shows a number of data available.
According to a Central Bank data, the monthly net investment in the national savings certificates and bonds hit its all-time high at Tk 5,420.59 crore in January this fiscal year (2016-17).
The net investment increased by 64.39 per cent in January year-on-year as the figure was Tk 3,297.38 crore in the corresponding period of the last fiscal, data available with the Directorate of National Savings (DNS) showed.
The previous monthly highest investment was Tk 4,402.85 crore in November last year.
Money market experts said the national savings tools have become a ‘political instrument’ as the politicians and bureaucrats are now investing heavily in the instruments to enjoy higher interest rates.
The huge net investment in the savings certificates and bonds has already created a risky situation for the country’s macro-economy as the government will have to face a budget mismatch due to providing huge amount of money as interest against the savings tools, they said.
According to the latest DNS data, the net investment in national savings certificates and bonds also skyrocketed to Tk 28,894.15 crore in the first seven months of the current fiscal compared with that of Tk 16,602.97 crore in the corresponding period of the financial year.
Savings instruments worth Tk 41,100.56 crore were sold through banks, national savings bureaus and post offices in the July-January period of FY17 against Tk 28,093.35 crore in the same period of FY16.
In the budget for FY17, the government set an annual borrowing target of Tk 19,610 crore from the NSCs.
The net investment in the national savings tools had hit a fresh record at Tk 33,688.60 crore in FY16 against the government’s NSC borrowing target of Tk 15,000 crore for the fiscal year.
DNS officials said that the net investment in the savings tools would beat the FY16 record within the next two months of this fiscal year if the existing trend in sales continued.
Due to the rush for the NSCs, the Finance Ministry has been forced to suspend all auctions for treasury bills and bonds for banks for this month for the first time in recent years as the government has decided not to borrow any fund from the banking sector.
The government made a net repayment of Tk 21,696.40 crore against ‘low-interest’ loans to the banking sector in the first seven months of FY17 by taking loans from the NSCs, a BB official said.
He said that the government was basically taking loans through the NSCs which carry interest rates between 11.04 and 11.76 per cent and repaying the bank loans (taken through T-bills and bonds) that carry interest rates between 2.95 per cent and 7.78 per cent respectively.
He said that the government faced pressure in paying interests to the clients who invested in the NSCs in recent years.
Policy Research Institute Executive Director Ahsan H Mansur told The New Nation on Sunday that the government had not decreased the rates of interest on savings certificates and bonds in the interest of vested quarters.
The national savings tools have become a ‘political instrument’ as the politicians and bureaucrats have influenced the government not to cut the interest rates for the NSCs, he said.
The vested quarters are now investing heavily in the national savings tools to enjoy higher interest rates.
The government should cut the rates of interest on the tools immediately and set fresh rates considering the rates for banks’ fixed deposit schemes, he added.
