bdnews24.com :
The government’s savings scheme is no longer benefitting the intended low-income groups-instead rich people are reaping a windfall from these instruments, says Bangladesh Bank’s Chief Economist Biru Paksha Paul.
“We know that pensioners, senior citizens and widows invest in savings certificates. But its high interest is now luring millionaires and diverting funds from the stock market as well,” he told a seminar on Sunday by the Board of Investment.
According to Paul, high interest rate is one of the major obstacles for encouraging private sector investment in Bangladesh to spur economic growth.
“The Bangladesh Bank is trying to cut down the interest rate, but savings certificates’ high yield is hindering the process.
“The government should slash this rate to encourage private sector investment and to prop up the stock markets,” he observed.
The Directorate of National Savings (DNS) has six types of savings instruments offering up to 13 percent interest while returns on bank deposits now stand below 10 percent.
According to the latest figures by the central bank, savings instruments worth Tk 265.33 billion were sold in the first two quarters (Jul-Feb) of the 2014-15 fiscal.
The government had to spend Tk 82.50 billon in the same period in interests and principal on the schemes.
It means in eight months, the government’s borrowing from this sector stands at Tk 182.83 billion, around three times the figure of the same period last fiscal.
And the budget for 2014-15 had earmarked only Tk 90.54 billion for borrowing from sales of savings instruments.
Earlier in April, Finance Minister AMA Muhith told bdnews24.com that they were considering to lower interest rates for DNS savings instruments.
The government’s savings scheme is no longer benefitting the intended low-income groups-instead rich people are reaping a windfall from these instruments, says Bangladesh Bank’s Chief Economist Biru Paksha Paul.
“We know that pensioners, senior citizens and widows invest in savings certificates. But its high interest is now luring millionaires and diverting funds from the stock market as well,” he told a seminar on Sunday by the Board of Investment.
According to Paul, high interest rate is one of the major obstacles for encouraging private sector investment in Bangladesh to spur economic growth.
“The Bangladesh Bank is trying to cut down the interest rate, but savings certificates’ high yield is hindering the process.
“The government should slash this rate to encourage private sector investment and to prop up the stock markets,” he observed.
The Directorate of National Savings (DNS) has six types of savings instruments offering up to 13 percent interest while returns on bank deposits now stand below 10 percent.
According to the latest figures by the central bank, savings instruments worth Tk 265.33 billion were sold in the first two quarters (Jul-Feb) of the 2014-15 fiscal.
The government had to spend Tk 82.50 billon in the same period in interests and principal on the schemes.
It means in eight months, the government’s borrowing from this sector stands at Tk 182.83 billion, around three times the figure of the same period last fiscal.
And the budget for 2014-15 had earmarked only Tk 90.54 billion for borrowing from sales of savings instruments.
Earlier in April, Finance Minister AMA Muhith told bdnews24.com that they were considering to lower interest rates for DNS savings instruments.
