Special Correspondent :
The government on Tuesday decided not to tinker with the interest rates on small savings schemes before elections despite pressure from various quarters, including bankers, think tanks and donors.
However, it formed a high-powered committee to assess overall situation of the national saving schemes prior to review their interest rates in future.
“The government has decided to review the interest rates of savings tools amid their ever rising sales that causes huge burden to national exchequer. But the review would not be done before the election,” Finance Minister AMA Muhith told reporters after a high-level- meeting held at the Bangladesh Secretariat in the afternoon.
Comptroller and Auditor General of Bangladesh Mohammad Muslim Chowdhury, Senior Secretary, Bank and Financial Institutions Division (BFID), Md Eunusur Rahman, Senior Secretary, Internal Resources Division (IRD) and Chairman, National Board of Revenue (NBR) Md Mosharraf Hossain Bhuiyan, Bangladesh Bank Governor Dr Fazle Kabir, Acting Finance Secretary Abdur Rouf Talukder and Director General, the Directorate of National Savings, Shamsunnahar Begum attended the meeting, among others.
Muhith said that a high-powered body, comprising officials of the finance and internal resource divisions, has been formed to work on the issue.
It has been asked to present a report in this regard within a period of next two months with recommendation of rate cut.
“Ideally, the yield rates on savings certificate should be just a bit (1-1.50 per cent) higher than the market rates. But now, those have become too high. So, the government is going to review the yield rates after the election.” Muhith said.
Currently, banks offer five to six per cent interest on deposits while rates on savings certificates are up to 12 per cent.
Muhith had wanted to reduce the rates in the budget for the current financial year, but had backed out following criticisms. He, later, said he would review the rates after the budget is passed.
The interest rates of savings certificates were cut for the last time in 2015 by an average two per cent to rein in sales.
“Interest rates of the savings certificates require further rationalization to rein in their sales. Otherwise, the government’s future debts will rise,” he added.
Muhith said incumbent government would complete the necessary task to review the rate cut and leave it for the successive government for its’ implementation.
“Hopefully, we will implement the new rates as Bangladesh Awami League is expected to come in the state power again,” he added.
Muhith also said that the operation of the Directorate of National Savings would come under the full automation from January 2019, which will help it plug loopholes in the operation in savings schemes.
Sales of national saving certificates hit a record high of Tk 75,100 crore in the fiscal (2016-17) compared with previous fiscal’s Tk 53,700 crore amid low rates on fixed deposit in banks.
According to an official figure, the government had paid Tk 16,046 crore as interests for the borrowing from national savings certificates during the fiscal 2016-17, while paid Tk 11,151 crore interest in the previous fiscal year (2015-16).
The government’s net borrowing from saving schemes was Tk 46,530 crore in the just concluded fiscal year (2017-18).
The government on Tuesday decided not to tinker with the interest rates on small savings schemes before elections despite pressure from various quarters, including bankers, think tanks and donors.
However, it formed a high-powered committee to assess overall situation of the national saving schemes prior to review their interest rates in future.
“The government has decided to review the interest rates of savings tools amid their ever rising sales that causes huge burden to national exchequer. But the review would not be done before the election,” Finance Minister AMA Muhith told reporters after a high-level- meeting held at the Bangladesh Secretariat in the afternoon.
Comptroller and Auditor General of Bangladesh Mohammad Muslim Chowdhury, Senior Secretary, Bank and Financial Institutions Division (BFID), Md Eunusur Rahman, Senior Secretary, Internal Resources Division (IRD) and Chairman, National Board of Revenue (NBR) Md Mosharraf Hossain Bhuiyan, Bangladesh Bank Governor Dr Fazle Kabir, Acting Finance Secretary Abdur Rouf Talukder and Director General, the Directorate of National Savings, Shamsunnahar Begum attended the meeting, among others.
Muhith said that a high-powered body, comprising officials of the finance and internal resource divisions, has been formed to work on the issue.
It has been asked to present a report in this regard within a period of next two months with recommendation of rate cut.
“Ideally, the yield rates on savings certificate should be just a bit (1-1.50 per cent) higher than the market rates. But now, those have become too high. So, the government is going to review the yield rates after the election.” Muhith said.
Currently, banks offer five to six per cent interest on deposits while rates on savings certificates are up to 12 per cent.
Muhith had wanted to reduce the rates in the budget for the current financial year, but had backed out following criticisms. He, later, said he would review the rates after the budget is passed.
The interest rates of savings certificates were cut for the last time in 2015 by an average two per cent to rein in sales.
“Interest rates of the savings certificates require further rationalization to rein in their sales. Otherwise, the government’s future debts will rise,” he added.
Muhith said incumbent government would complete the necessary task to review the rate cut and leave it for the successive government for its’ implementation.
“Hopefully, we will implement the new rates as Bangladesh Awami League is expected to come in the state power again,” he added.
Muhith also said that the operation of the Directorate of National Savings would come under the full automation from January 2019, which will help it plug loopholes in the operation in savings schemes.
Sales of national saving certificates hit a record high of Tk 75,100 crore in the fiscal (2016-17) compared with previous fiscal’s Tk 53,700 crore amid low rates on fixed deposit in banks.
According to an official figure, the government had paid Tk 16,046 crore as interests for the borrowing from national savings certificates during the fiscal 2016-17, while paid Tk 11,151 crore interest in the previous fiscal year (2015-16).
The government’s net borrowing from saving schemes was Tk 46,530 crore in the just concluded fiscal year (2017-18).
