bdnews24.com :
Investors are rushing to buy savings certificates at the current interest rate before it is cut.
An unprecedented number of buyers have lined up at the Bangladesh Bank’s Motijheel Office, the principal office of Sonali Bank, and various other bank branches, hoping to buy savings certificates before the rate is cut, as announced.
The interest rate cut for savings certificates was announced by Finance Minister Abul Maal Abdul Muhith on May 21. But he had not provided details on how much would the cut be and when the new rate will take effect.
“At the moment the interest rates on saving certificates are really quite high,” the finance minister had said, responding to the demands of Dhaka Chamber of Commerce and Industries leaders.
“Usually interest on savings certificates is 1 to 2 percentages higher than the rate on deposits, but currently the difference between the two stands at more than 4 percent.”
The interest rate on bank deposits is currently between 4 to 6 percent. The interest rate on saving certificates is between 11 to 12 percent.
“If this continues, more people will look to invest in the certificates, raising the government’s future debt burden,” Muhith said. “This is why we are looking to review the rate.”
The interest rate on savings certificates was reduced in 2015 in an attempt to curb sales, but sales only continued to increase. As a result, the government will have to lower the rate again, Muhith said.
The lower interest on bank deposits and the uncertainty in the stock market have led to more purchase of savings certificates. A decrease in deposit interest rates spurred further sales.
The announcement of the interest rate cut has now led to a rush to purchase certificates under the current rate.
The Bangladesh Bank Motijheel offices were packed by their opening at 9:30am on Tuesday.
Long queues were seen at the Help Desk (which accepts savings certificate forms) as soon as the main gate was opened. As the day wore on the line only grew longer.
Some waited to pay after submitting their forms.
Others had come to collect interest from previous savings certificates.
The rush persisted until 1:30 am.
Shipra Rani Das had come to buy a family savings certificates for her daughter, BUET student Bina Rani Das.
Tk 200,000 worth of savings certificates had already been bought in Bina’s name, but her mother had come to buy an additional Tk 100,000 in certificates.
“I have heard the interest rate will be cut so I am buying Tk 100,000 in savings certificates so that her university fees can be paid,” she told bdnews24.com.
Many others had come to the bank with similar plans.
A five-year Tk 100,000 savings certificate currently pays interest of Tk 912 a month. The savings certificates paid Tk 1,070 before the 2015 reduction.
Retired public servant Alauddin had come to collect the interest on his pensioners’ savings certificate.
Investors are rushing to buy savings certificates at the current interest rate before it is cut.
An unprecedented number of buyers have lined up at the Bangladesh Bank’s Motijheel Office, the principal office of Sonali Bank, and various other bank branches, hoping to buy savings certificates before the rate is cut, as announced.
The interest rate cut for savings certificates was announced by Finance Minister Abul Maal Abdul Muhith on May 21. But he had not provided details on how much would the cut be and when the new rate will take effect.
“At the moment the interest rates on saving certificates are really quite high,” the finance minister had said, responding to the demands of Dhaka Chamber of Commerce and Industries leaders.
“Usually interest on savings certificates is 1 to 2 percentages higher than the rate on deposits, but currently the difference between the two stands at more than 4 percent.”
The interest rate on bank deposits is currently between 4 to 6 percent. The interest rate on saving certificates is between 11 to 12 percent.
“If this continues, more people will look to invest in the certificates, raising the government’s future debt burden,” Muhith said. “This is why we are looking to review the rate.”
The interest rate on savings certificates was reduced in 2015 in an attempt to curb sales, but sales only continued to increase. As a result, the government will have to lower the rate again, Muhith said.
The lower interest on bank deposits and the uncertainty in the stock market have led to more purchase of savings certificates. A decrease in deposit interest rates spurred further sales.
The announcement of the interest rate cut has now led to a rush to purchase certificates under the current rate.
The Bangladesh Bank Motijheel offices were packed by their opening at 9:30am on Tuesday.
Long queues were seen at the Help Desk (which accepts savings certificate forms) as soon as the main gate was opened. As the day wore on the line only grew longer.
Some waited to pay after submitting their forms.
Others had come to collect interest from previous savings certificates.
The rush persisted until 1:30 am.
Shipra Rani Das had come to buy a family savings certificates for her daughter, BUET student Bina Rani Das.
Tk 200,000 worth of savings certificates had already been bought in Bina’s name, but her mother had come to buy an additional Tk 100,000 in certificates.
“I have heard the interest rate will be cut so I am buying Tk 100,000 in savings certificates so that her university fees can be paid,” she told bdnews24.com.
Many others had come to the bank with similar plans.
A five-year Tk 100,000 savings certificate currently pays interest of Tk 912 a month. The savings certificates paid Tk 1,070 before the 2015 reduction.
Retired public servant Alauddin had come to collect the interest on his pensioners’ savings certificate.
