Policymakers believe a huge chunk of black and untaxed money has long been invested in savings instruments
The government is planning to make the Taxpayer’s Identification Number (TIN) and National Identity Card (NID) mandatory for investing in savings certificates.
According to sources, the government is considering the measure as a means to prevent money laundering.
Policymakers believe a huge chunk of black and untaxed money has long been invested in savings instruments, and more savings certificates are being sold than the government's targeted amount.
Department of National Savings Director General Shamsunnahar Begum said the department is set to sign an agreement with the National Board of revenue (NBR) and the Election Commission in this regard soon.
She added that the Department of National Savings is yet to investigate what classes of people buy savings certificates. "We have no data about which groups of people buy the most savings certificates."
Shamsunnahar further said any citizen of Bangladesh over the age of 18 is eligible to buy savings certificates.
Meanwhile, the Debt Management Committee of the government in a recent meeting decided to make it mandatory for savings certificates buyers to have an NID and TIN.
A senior NBR official said it will be possible to connect savings certificates to TINs, as a database of savings certificates is being prepared.
He further said: "If TIN is made mandatory for savings certificates, even if it causes inconvenience, the government's revenue will increase, which will in turn reduce the pressure on the government in terms of loan management."
Policy Research Institute (PRI) Executive Director Ahsan H Mansur said a major portion of the country's black money is being invested in savings certificates. "It is the rich who are buying these [savings] instruments."
He further claimed 85% of savings certificates are being bought by senior government officials, politicians, and rich people.
"85% of the savings certificates are being sold to only 12% of the people of the country," Ahsan said, adding that the remaining 15% are being sold to 88% of the country's people.
According to data from Bangladesh Bank, savings certificates are continuously being sold despite no improvement in the business conditions of the country.
In the first five months of the current fiscal year (FY2018-19), savings certificates worth Tk29,662 crore were sold—82.69% of the targeted sales of certificates for the entire fiscal year.
There are two main reasons behind the people’s preference for buy savings certificates. First, no inquiries are made regarding the origin of the buyers' funds. Second, interests on savings certificates are higher than that on other deposits.
Department of National Savings Director General Shamsunnahar Begum said the people also believe that savings certificates are more secure than other deposits.
The rates offered by the NSCs are between 11.04% and 11.76%. On the other hand, banks are offering much lower interest rates,while many of them are giving 4-6% interest against deposit products,with a view to reduce lending rates to facilitate investment following an initiative from government high-ups.
Last year, the Bangladesh Association of Banks (BAB) had taken a decision to lower the interest rate on savings and lending to 6% and 9% respectively from July 1, which lured savers to park their funds with government tools. In contrast, the interest rate on savings certificates ranged from 11.04% to 11.76%.