Staff Reporter :
Sales of savings certificates witnessed a significant rise during the first eight months of the current fiscal (2014-15) reflecting savers’ growing confidence on such instruments, sources said.
They said most of the pensioners and small savers now prefer investing in the government’s savings schemes than the financial instruments of banks due to their higher return.
According to an official figure, the overall sales of savings certificates reached Tk 26,533 crore during the July-February period of the current fiscal compared with Tk 14,955 crore during the corresponding period in the last fiscal.
“Most banks have cut interests on term deposits as well as lending rates forcing the depositors to withdraw their deposits from the
banks, and also look for alternative investment sources. This has increased sales of savings certificates,” former Bangladesh Bank (BB) governor Dr Salehuddin Ahmed told The New Nation yesterday.
He said, thousands of pensioners and savers are on the run to invest in saving certificates expecting high returns. Besides, a certain amount of savings by pensioners has been made tax-free in the current budget, which also led to a rise in the sales of the savings instruments. Insiders said, now the difference between interest rates for bank deposits and savings certificates is between 4 and 5 per cent. Most of the banks offer 8-9 per cent interest rates for fixed deposits, down from 12-13 per cent for the savings tools.
“Savers do not have any option but to invest in saving certificates when the banks cut their rates on deposit collection,” said BB former Deputy Governor Dr Khondoker Ibrahim Khaled.
He added: Pensioners and savers are showing more interest in investing in savings certificates emptying their bank deposits on the hope of high returns.
When asked, Dr AB Mirza Azizul Islam, former Finance Adviser of the caretaker government said, “The rise in sales of savings instruments has both the positive and negative impact on the economy. He said, savings tools are the main source of the government internal borrowings. Once the government utilizes it for productive purpose it will have positive impact on economy. On the other hand, the rise in sales of savings certificates will push up the government’s expenditure on interest payment bringing negative impact on the economy. “Fund collection through sales of savings tools is the most expensive means of internal borrowing as the government has to allocate a huge chunk of money every year from revenue budget for interest payment,” he noted.
Sales of savings certificates witnessed a significant rise during the first eight months of the current fiscal (2014-15) reflecting savers’ growing confidence on such instruments, sources said.
They said most of the pensioners and small savers now prefer investing in the government’s savings schemes than the financial instruments of banks due to their higher return.
According to an official figure, the overall sales of savings certificates reached Tk 26,533 crore during the July-February period of the current fiscal compared with Tk 14,955 crore during the corresponding period in the last fiscal.
“Most banks have cut interests on term deposits as well as lending rates forcing the depositors to withdraw their deposits from the
banks, and also look for alternative investment sources. This has increased sales of savings certificates,” former Bangladesh Bank (BB) governor Dr Salehuddin Ahmed told The New Nation yesterday.
He said, thousands of pensioners and savers are on the run to invest in saving certificates expecting high returns. Besides, a certain amount of savings by pensioners has been made tax-free in the current budget, which also led to a rise in the sales of the savings instruments. Insiders said, now the difference between interest rates for bank deposits and savings certificates is between 4 and 5 per cent. Most of the banks offer 8-9 per cent interest rates for fixed deposits, down from 12-13 per cent for the savings tools.
“Savers do not have any option but to invest in saving certificates when the banks cut their rates on deposit collection,” said BB former Deputy Governor Dr Khondoker Ibrahim Khaled.
He added: Pensioners and savers are showing more interest in investing in savings certificates emptying their bank deposits on the hope of high returns.
When asked, Dr AB Mirza Azizul Islam, former Finance Adviser of the caretaker government said, “The rise in sales of savings instruments has both the positive and negative impact on the economy. He said, savings tools are the main source of the government internal borrowings. Once the government utilizes it for productive purpose it will have positive impact on economy. On the other hand, the rise in sales of savings certificates will push up the government’s expenditure on interest payment bringing negative impact on the economy. “Fund collection through sales of savings tools is the most expensive means of internal borrowing as the government has to allocate a huge chunk of money every year from revenue budget for interest payment,” he noted.
