Sales of national savings certificates are steadily declining. As a result, the government has to take more bank loans. In the first five months of the current 2021-22 financial year in other words from July to November, national savings certificates worth Tk 44,270 crore have been sold. At this time the principal and profit of the old savings certificate have been paid 34 thousand 244 crores.
The government’s net debt in this sector is 10 thousand 25 crore. 9,019 crore or about 53 percent is less than the same period of the previous financial year. This information has come up in the latest updated report of the National Savings Department.
The government has to borrow more from the banking sector as the collection of funds from savings certificates has decreased. According to the Bangladesh Bank, in the first six months of the current financial year, in other words from July to December, the government borrowed Tk 18,781 crore from the banking system. As a result, at the end of December 30, the government’s bank loan stood at Tk 2 lakh 20 thousand 896 crore, which was Tk 2 lakh 2 thousand 115 crore on June 30.
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Stakeholders are speculating that investment in savings certificates is declining due to various conditions including the reduction of interest rates. In September last year, interest rates on savings certificates were reduced by more than Tk 1.5 million. Again, provision has been made for jail penalty if there is a savings certificate outside the declaration. For this reason, it is believed that many people have reduced their investment in savings certificates. It may be mentioned that the government has set a target of borrowing Tk 32,000 crore from this sector in the current 2021-22 fiscal year to meet the budget deficit. In the first five months, 31 percent of the target has been borrowed.
According to the National Savings Department, the government sold a total of Tk 8,941 crore in November this year. Of this, Tk 8,240 crore has been paid as principal and profit. The remaining amount after the principal is paid is treated as a net sale. As such, the net sales during the period under discussion were Rs 701 crore.
The budget deficit for the current financial year 2021-22 (excluding grants) has been fixed at Tk 2,14,681 crore, which is 6.2 percent of the total GDP. The government plans to borrow Tk 76,452 crore from the banking sector to fill the gap. In the previous financial year, the government had set a target of taking Tk 84,980 crore from the bank, but the government took only Tk 26,078 crore. The government’s bank lending is expected to increase as sales of savings certificates decline.
Recently, the government has made some changes in the investment in savings certificates. In the current budget, a tax identification number (TIN) has been made mandatory for purchasing savings certificates or postal savings of more than Tk 2 lakh. Besides, the five-year term Bangladesh Savings Certificate will be available only at the Department of Savings.
Lastly, on 21st September, a notification was issued to reduce the profit rate of savings certificates. The profit rate has been reduced by investing more than Tk 15 lakh in savings certificates. However, the profit rate below Tk 15 lakh has been kept unchanged.