bdnews24.com :Mar 6, Thursday, 12pm: The ground floor of Bangladesh bank in Dhaka’s Motijheel is bustling with the activities of more than a hundred women. Some are drawing cash, some depositing and many others are waiting for their turn.This is the usual scenario on the first week of the month, according to central bank officials. The female crowd here is either busy to cash in the monthly profit of saving certificates or investing in new ones.People especially the women are now opting for saving certificates as it offers better interest rates than the banks.Housewife Monowara Ishrat from Dhaka’s Mirpur has invested Tk 700,000 in a 5-year saving scheme offered by Directorate of National Savings (DNS) of Bangladesh.”I came in to draw the profit of it. Got about Tk 24,000″, she told bdnews24.com.The Family Savings Scheme was introduced during the 1996-2001 term of the Awami League but in the subsequent regime of the BNP-Jamaat alliance, the DNS stopped offering it.It was re-introduced during the last regime of the Awami League.”I meet the monthly expenses like, rent and food, with the husband’s salary. The expense of children’s education is taken care by the interest I get from the saving certificates,” said Ishrat.According to an official of the Bangladesh Bank, 400-500 women cash in interest incomes each day and another 100-150 invest in new ones.Saving certificates sale in the first seven months of the 2013-14 has grown by 14 times over the same period of the previous fiscal, which analysts say reflects the trend of ‘safe investments’.Former Governor of the Bangladesh Bank Mohammad Farashuddin feels people are opting for ‘safe investment’ in savings certificates because of a fall in the interest rates of bank deposits and a sluggish capital market.Economist Zayed Bakht echoed him: “People are going for saving certificates as they consider it as a safe investment.”Hike in saleThe higher interest rate has compelled a lot of women to invest in the Family Saving Certificate thus ensuring a significant increase in the sales.According to figures provided by the Directorate of National Savings (DNS) of Bangladesh, net sales in the first seven months of the 2013-14 (Jul-Jan) amounted to Tk 50 billion, which is 14 times of the sale during the same time of 2012-13.The net sales are calculated by deducting the liquidated amount of previously sold certificates from the total sales of saving certificates at a given time. Savings certificates holders get the original amount and the accumulated interest over it during liquidation.The DNS issues six types of saving certificates. The top selling scheme is the Family Savings Certificate accounting for 80 percent of the sales followed by Pensioners’ Savings Certificates with 15 percent and the rest comprised of the other schemes.Among the DNS’s savings schemes, the Family Savings Certificate offers the highest interest rate at about 13 percent.Sales in the first month of the fiscal (July 2013) was Tk 624.94 million and on Jan this year it rose to Tk 11.26 billion, which was only Tk 185 million in Jan, 2013.According to Farashuddin, the prime investors in the DNS savings schemes are the mid-income and the lower-mid income groups. “That’s why the sales of saving certificates have surged.”‘Slump’ in govt’s bank borrowingIn the seven months of the ongoing fiscal, the government has surpassed the projection to borrow from DNS to bridge the budget deficit. Former central bank chief Farashuddin concludes this as the reason behind the decreased borrowing from the banking system by the government.The budget for 2013-14 has earmarked Tk 49.71 billion for borrowing from sale of savings certificates while the sale in the first seven months of the fiscal touched Tk 50 billion.”This is a good thing. The government can fund development projects by borrowing from this sector. It won’t have to depend on bank-borrowing like the previous 2-3 years,” said Zaid Bakht, a research director of Bangladesh Institute of Development Studies.The current fiscal’s budget set to borrow Tk 259.93 billion from the banking system.According to Bangladesh Bank figures, the government has borrowed Tk 36.16 billion from the banks in the Jul-Jan period of the current fiscal, which was at Tk 84.26 billion during the same period of the previous fiscal.”Development works were rather slow in the run-up to the national election. That’s why the government’s expenditure was less. The government did not need to borrow much from the banks as its demands were met by the sales of savings certificates,” said Mohammed Farashuddin, speaking to bdnews24.com.The last fiscal’s (2012-13) budget had set the government borrowing from the banking system at Tk 230 billion to bridge the deficit, which was later scaled up to Tk 285 billion at the end of the fiscal.Increased borrowing by the government from the bank squeezes the credit inflow to the private sector.
